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Friday, September 16, 2011

ONGC defers the FPO, stock rallies 6%

Ultimately government again postponed the ONGC FPO of 42.77 crore shares to early October. Government was supposed to divest 5% stake in the company under its disinvestment program.After this FPO, government’s stake shall be reduced to 69% from earlier 74%.
Market was apprehensive of equity dilution of the company from this FPO. ONGC is already burdened by the government which makes the company share the under recovery by downstream oil companies. ONGC is even losing its monopoly as NELP (national exploration licensing policy) is resulting in greater participation from private players.
Market take deferment of ONGC FPO positively and by the time of this post stock was up by 5.41%.

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