International Journal of Financial Management

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Study of the Contribution of Central Public Sector Enterprises and Public Sector Financial Companies to the Bombay Stock Exchange Market Capitalization


Affiliations
1 Senior Professor and Director, Institute of Public Enterprise, Osmania University, Hyderabad
2 Assistant Professor (Finance), Institute of Public Enterprise, Osmania University, Hyderabad
     

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Central Public sector Undertakings and Public Sector Financial Institutions (CPSEs and PSFIs) were seen as white elephants and cash cows during the 1960s 70s and 80s. After the liberalization from the early 90s the continuous losses, operational and administrative inefficiencies have created a number of problems for them. However at the same time, so many companies in the public sector are still doing well and contributing significantly to the exchequer, even though the dominance is in the hands of the private sector. Objectives of the study are - To find the pattern of movement of the CPSEs and PSFIs stocks quoted at BSE and BSE total market capitalization. To find whether CPSEs and PSFIs market capitalization plays a significant role in the total BSE market capitalization. To find whether individual CPSEs Sectoral market capitalization influences BSE market capitalization. The study observes that overall CPSEs and PSFIs have contributed 23 percent on average and CPSEs have contributed 19.57 percent and PSFIs 3.44 percent for the BSE market capitalization during the study period. From the regression analysis it is observed that R2 value is 0.96 and it is understood that the relation is very strong and positive and it indicates that there is a good fit between the market capitalization of BSE and PSU. The paper concludes that the contribution of CPSEs and PFSIs has been on an increasing trend and this would provide stability to the stock market in the long run as there involves control of the government in the operations of these CPSEs and PFSIs.

Keywords

G32, H54, H83, R53
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  • Study of the Contribution of Central Public Sector Enterprises and Public Sector Financial Companies to the Bombay Stock Exchange Market Capitalization

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Authors

R.K. Mishra
Senior Professor and Director, Institute of Public Enterprise, Osmania University, Hyderabad
Pawan Kumar Avadhanam
Assistant Professor (Finance), Institute of Public Enterprise, Osmania University, Hyderabad

Abstract


Central Public sector Undertakings and Public Sector Financial Institutions (CPSEs and PSFIs) were seen as white elephants and cash cows during the 1960s 70s and 80s. After the liberalization from the early 90s the continuous losses, operational and administrative inefficiencies have created a number of problems for them. However at the same time, so many companies in the public sector are still doing well and contributing significantly to the exchequer, even though the dominance is in the hands of the private sector. Objectives of the study are - To find the pattern of movement of the CPSEs and PSFIs stocks quoted at BSE and BSE total market capitalization. To find whether CPSEs and PSFIs market capitalization plays a significant role in the total BSE market capitalization. To find whether individual CPSEs Sectoral market capitalization influences BSE market capitalization. The study observes that overall CPSEs and PSFIs have contributed 23 percent on average and CPSEs have contributed 19.57 percent and PSFIs 3.44 percent for the BSE market capitalization during the study period. From the regression analysis it is observed that R2 value is 0.96 and it is understood that the relation is very strong and positive and it indicates that there is a good fit between the market capitalization of BSE and PSU. The paper concludes that the contribution of CPSEs and PFSIs has been on an increasing trend and this would provide stability to the stock market in the long run as there involves control of the government in the operations of these CPSEs and PFSIs.

Keywords


G32, H54, H83, R53

References