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Nerves taut on the eve of ONGC market voyage

Mumbai, March 4: The ONGC issue was on everybody’s mind as a nervous stock market waited to see if investors had any appetite left for the last but not least in the series of six public offers. The issue opens tomorrow.

Snapping a three-day winning streak, the sensex moved southwards as operators wound up positions and booked profits. The 30-share BSE sensex shed 26.33 points, or 0.45 per cent, to close at 5815.87 against Wednesday’s close of 5842.20. However, the index touched an intra-day high of 5872.75 on some buying support from operators.

Even as the markets trembled before the mega issue hit the stands, the ONGC stock remained bouyant. The share gained Rs 8.50 to close at Rs 760.05, a day after the government set an ambitious band of Rs 680-Rs 750 per share for the ensuing offer. Brokers are disappointed with the band but admit that foreign investors will find the issue very attractive. Many foreign funds from the petroleum sector will invest, they said.

As ONGC enters the primary market, Gail, another public sector undertaking, will exit tomorrow, having attracted bids over 3.9 times its offering.

Shares of Hindustan Lever and Procter & Gamble fell sharply for the second day in succession.

Brokers feel heavy-weight Reliance and HLL’s losses pulled the sensex down from its highs today. HLL shed 4.04 per cent and dipped by Rs 6.65 to Rs 158.05. However, Grasim, ICICI Bank, Infosys and SBI rallied smartly and helped the sensex regain some poise. The volume of business was relatively low at Rs 2,654.59 crore against Rs 2,815.05 crore on Wednesday, despite longer hours of trading as NSE was affected by the sun outage.

Reliance lost Rs 5.85 to Rs 574.50, Tata Motors shed Rs 12.75 to Rs 524.20 and Zee Telefilms lost Rs 6.35 to Rs 130.60. Infosys gained Rs 110.10 to Rs 5,297.

Participatory notes

Lead managers to the ONGC issue have agreed not to charge any commission on participatory notes aimed at attracting large foreign investors.

An undertaking to this effect was given by the three lead managers — DSP Merrill Lynch, Kotak Mahindra Capital and JM Morgan Stanley — earlier this week, sources associated with the divestment process said.

The merchant bankers had quoted an all-time low figure of 0.075 per cent as transaction fee for the mandate.

The government is understood to have taken the step to avert any possible litigation in case other merchant bankers, who were in the fray for the issue, take up cudgels against the combined transaction fees and commission for participatory notes. The waiver of charges is part of the three conditions agreed to by the merchant bankers, including full disclosure of information for issuance of participatory notes.

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