HPCL was in reverse gear on Tuesday as operators, who had built up positions in the stock on expectations of the government's okay for disinvestment, are now offloading the stock once the final approval has indeed been granted.

The reflex action saw HPCL slipping 2.3% to Rs 293.30 on BSE in afternoon trades. It came sharply off the day's high of Rs 301.60. It had also hit a low of Rs 290, earlier. Volumes of around 8.2 lakh HPCL shares were registered so far on BSE.

The scrip had also eased from its high on Monday to end flat after the Cabinet Committee on Disinvestment gave the go ahead to the strategic sale of government stake.

Dealers say the current fall in HPCL has materialised as players are shedding positions built up in anticipation of the Centre's final approval to the HPCL divestment. Also, it is held, that there are lingering concerns over the fact that HPCL's employees are threatening a strike over the divestment plans. Over the last few months, operators had pushed HPCL to multi-month highs .

On Sunday, the Cabinet Committee on Divestment had given the final approval to the divestment (as well as the modus operandi for divestment) of oil refining and marketing public sector undertakings Hindustan Petroleum Corporation and Bharat Petroleum Corporation while not specifying the timeframes for their sale.

The CCD met on Sunday evening and later divestment minister Arun Shourie informed the press that HPCL would be privatised through sale of equity to a strategic partner and Bharat Petroleum through a public offer. As much as 5% equity has been earmarked for employees in both the oil PSUs.

In case of HPCL, 34.01% will be sold to a strategic partner, 5% to the company's employees and the government will retain 12% equity. The government currently has a 51% stake in HPCL. With regard to BPCL, the government will come out with a public issue of 35.2% of the equity, 5% will be reserved for its employees and the government will retain 26%.

Market men say the next trigger for HPCL will be the reserve price that the government sets for the disinvestment. If the reserve price is about Rs 500-600 per share, the stock's fortunes will be boosted.

Meanwhile, thousands of workers from state-run petroleum companies on Monday threatened a nationwide strike to block the sale of government stake in HPCL and BPCL. The threat came a day after the Centre cleared the sale of stakes in BPCL and HPCL.

The workers of the two oil firms warned that their general strike will begin the day the Centre invites investors to buy stake. All activities in the oil sector, right from oil exploration and production to refining and marketing across the country will be brought to a halt, they said.

The privatisation policy was meant for revamping sick and loss-making state-run companies and there was no logic in privatising highly profitable companies like HPCL and BPCL, which have been giving government regular dividends without budgetary support, they said.

BSE Code: 500104