Cairn India stock drops in morning trade

Shares of Cairn India fell by over four% 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% to touch an early low of Rs 332.10 on the BSE, while on the NSE, the scrip went down by 4.16% to touch a low of Rs 332.30.

"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.

Meanwhile, shares of ONGC also fell by 1.59% to touch a touch a low of Rs 278.50 on the BSE.