ONGC gains as govt begins 5% stake sale

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Shares of ONGC on Thursday began trading with modest gains in a weak market, as the government began sale of its 5 per cent stake in the public sector energy giant through a one-day auction process on the bourses.

The ONGC stock was trading 0.5 per cent up at Rs 294.75 in early morning trade at 9.33 am. The stock had risen to as high as Rs 296.50 within minutes of the opening of trade.

The gains in ONGC shares were in sharp contrast to the overall weakness in the market and the benchmark Sensex was trading 158 points or about one per cent down.

An auction process began at 9.15 am at the bourses for sale of the government's five per cent stake in the company and would continue till 3.30 pm

The floor price has been fixed at Rs 290 per share and the shares would be allocated on 'price-priority' basis, meaning the bidders at highest price would be allotted shares.

A day ahead of the auction, the ONGC stock had settled 3 per cent higher on the bourses at Rs 293.35 on the BSE.

The government on Tuesday decided to offload five per cent stake in ONGC through the auction route and the planned sale could fetch the government about Rs 12,000-13,000 crore.

The government owns 74.14 per cent stake in ONGC and has proposed to sell 427.77 million shares or 5 per cent equity.

The floor price, the minimum price for the sale of shares, was over 2 per cent higher than ONGC's closing price of Rs 283.05 on NSE and Rs 283.55 on BSE on Monday.

The BSE is the designated exchange for the proposed share sale, but orders can be placed on both the BSE and NSE.

The sale of shares is taking place at a separate window of the two bourses. Any modification or cancellation of the orders would not be allowed in the last 30 minutes.

No single buyer, other than mutual funds and insurance companies, would be allocated more than 25 per cent of the size of the offer.

In the event of the total number of orders received at or above the floor price being less than the number of shares being offered for sale, the government would have the right to either conclude the sale to the extent of subscription or cancel the sale.

As per the data available with the stock exchanges, bids came for over 37,500 shares in the first hour of the auction at the BSE and the NSE.

Investment bankers said that the early bids were mostly coming at around Rs 293-294 per share level.

The shares had also pared part of their early morning gains and were trading 0.1 per cent higher at Rs 293.65 at 10.25 am.

The market barometer Sensex also extended its losses and was down nearly 200 points or over 1 per cent.