ONGC drops 2% over retail ceiling

The Oil and Natural Gas Corporation (ONGC) scrip fell 2.07 per cent to close at Rs 735.45 yesterday on massive selling despite a reservation of up to 10 per cent equity shares of its public issue for ordinary shareholders of the company and its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL).

Market sources said the reservation made no sense as no investor will buy at current market prices when he has the chance of getting the same shares at a discount in the forthcoming public offering.

There was a lack of clarity in the markets on whether investors buying the ONGC scrip on February 19 and February 20 will be eligible for the special reservation.

ONGC has set February 20 as the record date. A section of the market said that since shares bought today will only be settled on Monday, buyers will not be eligible for the preferential allotment.

Jitendra Panda, vice-president - retail at Motilal Oswal securities, says, "Investors who bought ONGC shares today will be recorded as share holders for the preferential allotment but this won't be valid tomorrow."

Official sources, however, said Indian Oil Corporation (IOC) and GAIL, which hold a significant number of ONGC shares will, however, not be entitled to apply under the reservation.

Hindustan Petroleum Corporation Ltd (HPCL), which holds over 14 per cent in MRPL, will also be not entitled for the reservation, they added.