Dr. Manmohan Singh sees recovery round the corner

The Indian government last week announced its intentions to go aggressive on listing of unlisted profitable public sector undertakings (PSUs). And the markets cheered, as seen from the near 5% jump in the BSE-PSU index. This suggests that markets have liked this move though we find no reason for the same. After all, the government will just be divesting a small part of its overall stake and will still be maintaining a strong control on all these companies even after the stake sale. Secondly, almost the entire money raised through the PSU IPOs will go into the government's coffers and nothing will flow into the companies going for listing.

Another thing, and this is the most important, is that you need to be very careful of the pricing of these PSU IPOs. Seeing the high valuations that were asked recently for the IPOs of NHPC and Oil India, the government might be looking to again rake in the moolah by going for aggressive pricing for these new IPOs.

If this happens to be the case, then you can comfortably give the forthcoming PSUs IPO a pass. Having said that, the underlying fact is that it is important to evaluate every IPO on its merit rather than follow any thumb rule.