The Hindu Business Line : FIIs shed ONGC over fears on new policy

THE ONGC stock on Friday bore the brunt of heavy selling pressure in the market. According to overseas fund managers and dealers in institutional brokerages, combination of several reasons may have forced selling in the heavyweight counter.

FIIs were understood to have sold the scrip significantly through overnight orders. "Apprehensions regarding lack of price parity prompted selling in the counter; the new government is not expected to allow oil price hike in relation to the international price rise in crude in the last few weeks. This was prime reason for selling," a chief investment officer of a foreign fund pointed out.

The explanation proffered by the market players was that the general uncertainty over divestment policy triggered index (the prominent weightage of ONGC stock in the key indices) and PSU stock sale by the overseas funds. The third reason for biggest ever price fall of 12.69 per cent in the counter was attributed to margin calls. "Many financiers have resorted to selling the stock, which were pledged with them, as prices came tumbling down", a dealer pointed out.

According to a sector analyst, the stock has been seeing aggressive acquisition since April this year. "In the last 15 trading days, when the Sensex declined by around 10 per cent, the ONGC stock by and large had held ground, except for today," an analyst with an institutional broking house observed.

Mr Mani Shankar Aiyar, Congress MP and member for the last JPC that probed the 2001 market scam, expressing his personal opinion told Business Line that what happened today could be described by the typical phenomenon of hot money. "A sneeze by government official in Nevada or certain comments by an Indian politician on TV may induce this overseas fund money to flow out. We had analysed these factors at length in the JPC report. The shallow and hot money dependent domestic capital market is bound to act disproportionately such non-events," he observed.

As on March 31, 2004, the FII holding in ONGC was placed at 6.09 per cent (over 8.68 crore shares). Today's volume in the counter was over 66.27 lakh shares on the NSE, second highest since March.

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