The government raked in a record Rs 22,600 crore by selling 10 per cent stake in Coal India Limited (CIL)-in the biggest-ever disinvestment- on Friday but markets posted their biggest fall in three weeks as money was rerouted from the buoyant secondary market to the primary market given the large-sized offering from the country's biggest miner.
Market players said that selling pressure grew as investors liquidated their positions to invest in the share sale. The poor financial results of banks contributed to the market's decline as well.
The benchmark Bombay Stock Exchange (BSE) Sensex hit a new high of 29,844.16 but succumbed to heavy profit-booking led by banking shares to fall by 498.82 points to 29,182.95.
The Nifty, which hit its all-time high of 8,996.60 earlier in the session, snapped its ten-day long rally to close at 8,808.90, down by 143.45 points, or 1.60 per cent.
The over-subscription demonstrates increasing confidence of investors in the government's initiative to bring about reforms and improvement in the economy.
Coal & power minister
The mining behemoth broke its own record of Rs 15,000 crore-plus made in 2010.
Life Insurance Corporation (LIC) alone picked up nearly one-third (Rs 7,000 crore) of the public offer.
It is a matter of great satisfaction that the biggest-ever issue has concluded successfully. … We are giving it our best shot to achieve the disinvestment target
The retail investor portion remained undersubscribed at 44 per cent 12.63 crore shares reserved for them could get bids only for less than half the size (5.56 crore).
"The amount of funds that were required to participate in the Coal India issue was huge. To generate funds, investors had to liquate their existing positions. Banking stocks, which have rallied sharply, saw profit-taking," said Deven Choksey, managing director, KR Choksey Securities.