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Cairn India drops amid uncertainty over royalty sharing issue

Monday, May 30, 2011
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Mumbai: Shares of Cairn India fell by over four per cent in the morning trade on bourses today as jittery investors went for panic selling amid uncertainty over the royalty sharing issue. The company's stock fell by 4.14 per cent to touch an early low of Rs 332.10 on the BSE, while on the NSE, the scrip went down by 4.16 per cent to touch a low of Rs 332.30. At 1:12 pm, shares of Cairn India were trading 3.02 per cent down at Rs 336 on the Bombay Stock Exchange. "The fall in the stock is because of concerns over royalty sharing. But, for long-term investors the stock still holds "buy" option," an expert said. The final decision in the Cairn Energy-Vedanta Resources stake sale deal will be taken by the Cabinet Committee on Economic Affairs (CCEA). A Group of Ministers has said that the two companies must agree to treat royalty on mainstay Rajasthan block as cost recoverable, and agree to pay cess. The GoM wants Cairn or its successor to agree to royalties paid by state-owned ONGC on its most important Rajasthan oilfields, as cost recoverable from oil sales. "There's a lot of uncertainty towards the counter and market does not like lingering issues towards any stock. There has also been lot of anxiety because the deal has been a long pending one. These are also playing the spoiler for the stock," Unicon Financial Solutions CEO Gajendra Nagpal said.
Source: PTI
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