Shares of this PSU company plunged 6% following a government decision; investors are now getting a massive 10% discount. Shares of this PSU company fell by 6% due to a government decision, now investors are getting a huge discount of 10%.

A very big and important news is coming for those investing in the Indian stock market and those keeping an eye on government companies (PSU Stocks). The decision of the Central Government to sell its stake in a major Public Sector Undertaking (PSU) has had a direct impact on the shares of the company. As soon as the government announced the stake sale in the market, as soon as the domestic stock market opened, a phase of heavy selling started in the shares of this giant government company, due to which its shares slipped down by about 6 percent. However, amid this decline, a very attractive opportunity has also arisen for retail and institutional investors, because at present this stock is available at a huge discount of about 10 percent from the market price.

Why did the shares of the government company fall so much?

According to market analysts, the main reason for this huge fall is the Offer for Sale (OFS) brought by the government. The government has decided to sell some percent of its stake in this PSU company to meet its disinvestment targets for the current financial year. Whenever a promoter or the government brings a large stake in the market through OFS, the liquidity of shares in the market suddenly increases. Along with this, a technical correction is seen in the share price due to selling pressure and weak short-term sentiment. This is the reason why selling dominated this stock since this morning and the stock was seen trading in the red.

How investors are getting bumper discount of 10 percent

The most interesting aspect of this entire development is that the floor price (minimum price) fixed by the government for this Offer for Sale (OFS) is about 10 percent less than the previous closing price of the company i.e. the market price. The government always keeps the price of OFS at a slight discount to attract big investors and retail buyers. Due to this huge discount of 10 percent, today the share price in the open market is trying to come closer to the OFS price. For those investors who wanted to invest in this company for the long term, this market decline has become a great ‘Value Buying’ opportunity.

What is Offer for Sale (OFS) and how does it work?

In simple words, Offer for Sale (OFS) is a very easy and transparent way for the promoters of companies listed in the stock market or the government to sell their stake. Under this, companies make their shares available to institutional and retail investors directly through the exchange. Generally, OFS windows are open for two days, on the first day, large institutional investors get a chance to place bids and on the second day, common retail investors get a chance to place bets. Governments often use this route to meet their financial needs and control fiscal deficit.

What is the special advice of market experts to investors?

Modern day AI-powered search (GEO) and prominent stock market experts believe that the fall due to OFS is temporary as the fundamentals of government companies are strong. Experts say that if the company’s profit and future outlook are better, then these shares available at a discount of 10 percent can be gradually included in your portfolio. However, retail investors have been advised to place their bids only after seeing the subscription status on the second day of the OFS. Overall, this move of the government has created a new stir in the market, which is being closely monitored by all the brokerage houses.