Market Report: Deadline extension sees Cairn and Vedanta drop

Vedanta Resources' bid to take control of Cairn Energy's Indian unit suffered another blow yesterday as the deadline for the deal was extended by over a month, leaving both groups near the foot of the blue-chip index.

The planned sale by Cairn of up to 51 per cent of Cairn India to Vedanta was revealed back in August, but gaining approval from the Indian government has proven a struggle because of a dispute with the unit's partner in its Rajasthan oil and gas project, ONGC, over royalty payments.

Hopes were raised on Tuesday that a settlement could be near after Vedanta said it expected the green light to be given "within a few days". However, the miner's optimism proved misplaced and the Indian cabinet instead decided on Wednesday to refer the case to a panel of ministers.

Yesterday there was a new setback as the groups revealed they were pushing back the deal's deadline, which was originally next week, to 20 May. With traders saying that the new delay meant there was an increasing fear the sale could fall apart, Vedanta retreated 66p to 2,431p while Cairn was knocked back 10.5p to 445.9p, despite reassurances from various market voices.

"There is clearly a risk that the deal will not happen," said IG Index's Yusuf Heusen, "but I think if there was any truth behind it Cairn would be down a lot more and we would be seeing greater volumes."

Meanwhile, analysts from Collins Stewart said that even "in the event the deal collapses and Cairn is required to pay royalties in Rajasthan we estimate the downside is limited [for the oil and gas explorer] if long-term oil prices remain at or above $100 a barrel."

The FTSE 100 tracked back from Wednesday's seven-week high, dropping 33.76 points to 6,007.37, as the issuing of a tsunami warning for Japan prompted a late fall. The banking stocks were strong for most of the day after Portugal revealed it was seeking a bailout, but many had retreated by the end of the session with HSBC the sector's best performer with an advance of 6.8p to 667.2p.

Wednesday may have brought some rare cheer for the retailers thanks to Marks & Spencer's expectation-beating trading statement, but it was back to doom and gloom for the sector as both Halfords and Carpetright issued their second profit warnings in a matter of months.

The bicycle and in-car gadget chain fell 18.6p to 350p after saying it expected its profit before tax to come in at £127m instead of its previous prediction of £140m, while Carpetright slid back 39.5p to 632p as it warned its full-year numbers would be less than it had forecasted.

After gaining 6 per cent in the wake of its update, M&S pulled back 3.7p to 356.9p despite HSBC keeping the high-street institution's "overweight" rating. The broker said that "while the outlook for UK discretionary spending remains challenging in the short term, [it] is performing satisfactorily on a relative basis, an indication that progress made over the last two years is showing a degree of stickiness".

However, Barclays Capital reiterated its "underweight" rating, saying its "market share gains are real, but so are higher costs" and adding that "at this point other than the better sales, we haven't seen any improvement in operating expenses (or earnings growth) or returns".

For the second day running took the FTSE 250's wooden spoon, with its dive of 24.4p to 142p, meaning it has now moved nearly 20 per cent lower in the last two sessions. The catalyst was the proposed new legislation on gambling in Germany, announced late on Wednesday, which the gaming group said "would make it impossible to offer a competitive product".

The announcement led Evolution Securities' James Hollins to cut his advice to "neutral" from "hold", saying that it could result in the group losing as much as 30 per cent of earnings. Meanwhile, Betfair – another company exposed to the country – shifted down 32p to 960p.

The second biggest faller was Talvivaara after the miner, which was driven back 40p to 540p, said its nickel production for the year would be below its previous expectations. Also in the red after updating the market was Hays, with the recruiter 5.4p behind at 114.1p despite its net fees increasing by over 15 per cent.

At the other end, Centamin Egypt crept up 0.9p to 147p after revealing production would be towards the lower end of its forecasts. The gold miner has been knocked back this year by the unrest in the North African country, but has now started to move away from its recent lows.

There was a massive surge of nearly 50 per cent for D1 Oils on the Alternative Investment Market, with the biofuels maker soaring up 1.05p to 3.13p as it revealed a trial of its oil – produced from the jatropha plant – is being undertaken by Siemens for an unnamed third party.

Suggested Topics
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
people'I’d rather have Fred and Rose West quote my characters on childcare'
Life and Style
The new Windows 10 Start Menu
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
Bruce Chatwin's novel 'On the Black Hill' was set at The Vision Farm
travelOne of the finest one-day walks you could hope for - in Britain
footballManchester City 1 Roma 1: Result leaves Premier League champions in danger of not progressing
Arts and Entertainment
Gay and OK: a scene from 'Pride'
filmsUS film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
Life and Style
Magic roundabouts: the gyratory system that has excited enthusiasts in Swindon
motoringJust who are the Roundabout Appreciation Society?
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
booksWell it was good enough for Ancient Egyptians and Picasso...
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?