Coal India shares fall on reported stake sale plans

Coal India shares slumped around six percent Monday after a report said the government planned to "speed up" a stake sale in the world's largest miner to reduce the country's deficit.

"The government is quickly pushing ahead (with) a blockbuster share sale" of 10 percent in a bid to raise 200 billion rupees ($3.7 billion), the Economic Times newspaper said, without citing sources.

"The finance ministry has already cleared the proposal," the newspaper said, adding that it awaits a final nod from the cabinet.

Coal India shares fell to a low of 302.7 rupees after the report.

In February, reports said Coal India was among the state firms identified for disinvestment during the next fiscal year to March 2014.

Finance Minister P. Chidambaram has decided to expand the government's privatisation plan in order to reduce the budget deficit, which is set to hit 5.2 percent of gross domestic product in the current financial year to March 31.

Wary of global ratings agencies which have threatened to downgrade India's credit ratings to junk, he has pledged to cut the fiscal deficit to 4.8 percent in the coming year.

Last month, the government raised about $570 million by selling 10 percent of its stake in state-run refinery Oil India, on strong demand from foreign investors.

In 2010, India had sold a similar stake in Coal India, which brought more than $3.4 billion into government coffers.