Public sector undertakings (PSUs), which were often dubbed as white elephants, seem to be far ahead of its peers when it comes to wealth creation for investors if the journey of the benchmark 30-share Sensex and sectoral indices of the Bombay Stock Exchange are anything to go by.

A study by FE shows that the BSE PSU Index, a representative barometer for listed public sector units, has outpaced all its peers with a wide margin to emerge as the topper in terms of market capitalisation pecking order.

More, the 48 odd central PSUs listed on BSE as of February 8, 2010, account for close to the 30% of the total market capitalisation of the exchange. This is significant as a total of 4,880 odd companies were listed on the exchange.

According to the numbers collated by FE, as of February 8, 2010, the BSE PSU index had a total market capitalisation of Rs 17,14,466.96 crore, which translates into 29.4% of the total value of stocks traded on the exchange. As of February 8, BSE has a total market capitalisation of Rs 58,30,942.01 crore and the 30-share BSE Sensex , which represents the bluest of the blue chip stocks listed on the exchange, had a market capitalisation of Rs 4,25,952.83 crore or 41.6% of the total value of scrips traded on the exchange.

While Sensex closed on February 8 at 15,935.61, the PSU index closed the day at 9,201.04. Sensex had hit an yearly high of 17,790.20 on January 6, 2010, and an yearly low of 8047.17 on March 6, 2009, the PSU index had an yearly high of 10287.24 points on January 19 this year, and hit an yearly low of 4,656.74 points on March 9, 2009.

??PSU stocks have been giving more returns to the investors compared to other sectoral stocks even in a direction less market. The PSU index seems to have outperformed Sensex in terms of returns to investors??, an analyst with a foreign fund house said.

??This should be music to the ears for government and those merchant bankers who are gearing up to make strategic disinvestment in the 60-odd CPSUs (Central public sector undertakings)??, said a fund manager with a Chennai-based mutual fund who does not wished to be named.

??That may send the market to a tail spin with investors liquidating positions in other stocks to raise funds to invest in new issues. The lackluster FPO (follow on pubic offer of NTPC may be due to the current market conditions”, he added.

As of February 8, the oil and gas sector finished as distant second to the PSu index in terms of market captalisation among the BSE sectoral indices. The hydro carbon sector had a total a market capitalisation of Rs 8,04,164.05 crore representing 13.79% of the total value of socks traded on the exchange, while the BSE TECk index came third with a total value of Rs 6,99,388.48 crore accounting for 11.99% of the total market capitalisation on the bourse.

The power sector had a total market capitalisation of Rs 6,18,962.18 crore accounting for 10.62% of BSE’s total market caitalisation while metals finished fifth in the M-Cap ladder with a value of Rs 5,93,115.58 crore or 10.17% of the total value of stocks traded on BSE.

The market capitalisation of all other sectoral indices such as IT (Rs 4,58,759.63 crore) , Bankex (Rs 4,29,319.3 core), Capital Goods Rs 3,35,227.93 crore), FMCG Rs (2,40,062.83 crore), Auto (Rs 2,09,984.6 crore ), and Health Care Rs (1,73,877.05 crore) had clocked only less than 10% of the total wealth created on BSE. The much touted Realty index was among the worst performers with a market capitalisation of Rs 1,10,023.33 crore representing a paltry 1.89% of the total value of traded scrips on the exchange, while the Consumer Durable sector finished last with a value of Rs 19,346.36 crore which translates into a negligible 0.33% of the total market capitalization on BSE.

According to analysts, one major reason for the steller performance of the PSU stocks would be the professional management which run the show in these companies and their liability to the companies stake holders. With the end of the ‘License Raj’ and opening up of the economy, the listed PSUs are just like any other, which had raised money from the street answerable to their stakeholders. So, the management of these PSUs, functions as the honchos of any listed companies liable to answer to the questions of their shareholders and are responsible for any willful omissions and commissions, a senior official of a leading CPSU said.