Power Grid falls around 12 percent on secondary issue plan

Reuters Market Eye - Power Grid Corporation of India slumped 11.2 percent after the company said it would issue 694.5 million new shares in a secondary offering to raise funds.

Shares fell on expectations that the state-run utility would price the offering at a discount to attract investor interest, and the negative impact on its P/E ratio from the equity dilution, traders said.

The company said on Thursday its board approved fresh public issue of up to 15 percent of existing paid up share capital.

"The FPO (Follow-on Public Offering) announcement is a culmination of uncertainty, in a stock with strong fundamentals. However, the overhang of a fresh issue is a key risk to our OW (Overweight rating) in the near-term," J.P.Morgan wrote in a note to clients.

(Reporting by Himank Sharma)