Why are BHEL shares falling today? Stock down 6%, 1st drop in 7 days

Shares of Bharat Heavy Electricals Ltd (BHEL) fell nearly 6 per cent in Wednesday's trade amid a broad-based selloff in the PSU space, even as the heavy electrical equipment maker said it has bagged Rs 9,500 crore order from NTPC for setting up the Singrauli Super Thermal Power Project, Stage-III (2x800 MW) in Sonebhadra District, Uttar Pradesh.

A total of 54 of 56 PSU stocks were trading in the red, with the BSE PSU index trading at 18,942.22, down 342.79 points or 1.78 per cent. This was against 274.90 points or 0.37 per cent fall in the BSE Sensex. GIC RE, Gujarat Gas Engineers India and MMTC Ltd were some of the PSU stocks that tanked over 5 per cent today.

"The PSU index currently attributes 34 per cent of the price to long-term growth expectations, approaching historical highs of 35 per cent in FY17. This leads us to  our cautiously optimistic view, which is predicated on the belief that while the overarching bullish trend for PSU may moderate, there remain pockets of opportunity that can give a fresh leg up to the rally and deliver outsized returns," Elara Securities said in a note.

BHEL shares fell on profit taking. The stock plunged 5.73 per cent to hit a low of Rs 249.70 on BSE. The BHEL stock had risen in the previous six sessions. BHEL said the NTPC order was for supply of equipment including boiler, turbine, generator and associated auxiliaries along with electrical and C&I, balance of plant Packages etc. BHEL would be erecting and commissioning and would also undertake civil works, BHEL said around the closing bell on Tuesday.

Elara, meanwhile, said that empirical evidence suggests that in a general elections year, the BSE PSU  Index rallies 14 per cent on average, with a tendency of returns to bottom out in February.  "Post bottoming and until the results announcement day, the Index has  yielded a return of 22 per cent. Further upside post Elections could come via value unlocking through disinvestment," it said.