Oil & Natural Gas Corp., India’s largest energy explorer, gained the most in more than a year in Mumbai trading after the government delayed a plan to sell shares in the company.
ONGC climbed 5.4 percent to 274.70 rupees, the most since June 25, 2010. The benchmark Sensitive Index advanced 0.3 percent. The stake sale would have fetched 118 billion rupees ($2.5 billion) at current prices.
The government decided not to go ahead with the 5 percent stake sale scheduled to start on Sept. 20, ONGC said in a stock exchange filing today, without stating a reason. This is the fourth postponement of the offer aimed at helping Finance Minister Pranab Mukherjee raise 400 billion rupees from asset sales this financial year.
“Sudden changes in decisions make it difficult for investors and shows the government’s decision-making process isn’t the way it should be,” said Deepak Pareek, a Mumbai-based analyst with Prabhudas Lilladher Pvt. “I don’t see anything has changed in the past month, the markets were weak then and are weak now.”
India’s benchmark Sensitive Index has slumped 17 percent this year, the worst performer in Asia, as fears of a sovereign debt crisis in Europe and a slowdown in the U.S. economy hit stock markets around the world.
A decision on the offer will be taken in due course, New Delhi-based ONGC said.
The government planned to offer 427.8 million ONGC shares, according to the sale prospectus dated Sept. 5. JM Financial Services Ltd., Citigroup Inc. (C), Bank of America Corp. (BAC), HSBC Holdings Plc (HSBA), Morgan Stanley and Nomura Holdings Inc. (8604) are managers to the sale, the document showed.
“It’s a knee-jerk reaction and knee-jerk reactions don’t inspire confidence,” Deven Choksey, managing director of Mumbai-based brokerage K.R. Choksey Share & Securities Pvt., said by telephone. “The government continues to say the disinvestment target will be met, but who can say with certainty, because decisions change so quickly.”
India’s government deferred the sale of shares in Steel Authority of India Ltd. (SAIL) in June because market conditions deteriorated. Mukherjee has raised 11.4 billion rupees, or 3 percent of this year’s asset-sales target so far, by selling shares in Power Finance Corp. in May.
“India is confident of meeting the share-sale target for the current financial year,” R. Gopalan, economic affairs secretary in the finance ministry, said in an interview today.
ONGC completed meetings with potential investors in Singapore, Hong Kong, London and New York during the past two weeks. The share sale, first planned for the quarter ending March 31, was subsequently rescheduled to the following quarter, July and then September.
“Global events mean the market is volatile and the government is probably not very comfortable with that,” said Jigar Shah, senior vice-president and head of research at Kim Eng Securities India Pvt. “It would’ve been very awkward if a government share sale didn’t succeed.”
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