According to Sanjay Kaul of FE Securities, ``PSUs stock were hammeredto unrealistic levels and there had to be a correction. Considering that most of these companies are market leaders in their fields, such low PEs were unwarranted.'' Even after a rise in their respective scrip prices, Bharat Petroleum and IPCL are trading at PEs of mere 7. MTNL, which is the market leader in telecom, is currently trading at Rs 196 which translates into a PE of just 11. Attractive valuations apart, signs of recovery has generated interest in PSU stocks. The reports of economic recovery has improved sentiment in the stocks like Steel Authority of India which reported a net loss for the first half of the current fiscal. Sail has risen from Rs 5.1 to Rs 5.55. Agrees an analyst with a foreign brokerage house, ``As recovery is slowly creeping in the economy, core sectors are the first to benefit. In the core sector, PSUs have a major share and thus, they are likely to be benefit the most from the recovery in the economy.'' Even the speculation about government planning to impose tariffs has alsoimproved the sentiment in these stocks. However, not all marketmen think alike. Says Motilal Oswal, member of BSE, ``Most of these PSUs are currently enjoying monopoly status and the day these sectors are opened to competition, these PSUs are unlikely to stand due to their high operating costs.'' Courtesy their monopoly status, most of the PSUs barring Sail and IPCL have performed well for the first half of the current fiscal despite the slowdown in the economy. BPCL reported a 56 per cent rise in its net profit to Rs 342 crore for the first six months of current fiscal. According to a dealer with a leading brokerage house, ``Government's recent declaration that disinvestment will be mostly done in the domestic market implies that liquidity would improve in the PSUs stocks since many scrips like Gail, VSNL, IOC and Container Corporation suffer on account of poor liquidity.''