Investors reacted coolly to the much hyped stake sale by the government in Oil and Natural Gas Corporation (ONGC), until the LIC stepped in to save the show.

Market analysts say that the floor price of Rs. 290 a share is to be blamed for the lukewarm response by investors. They say that the government should have set the market price at a discount to guarantee success of the auction.

The state run oil maker has a market value of more than $49 billion. The stake sale, which was to help the government get closer to achieving its target of generating Rs. 40,000 crore from disinvestments, was held on Thursday.

Petroleum and Natural Gas Minister, S Jaipal Reddy had said earlier this week that the government is planning an auction route for disinvesting its stake in ONGC. The auction route was used for the first time by the government to sell its state in the state-run firm.

The auction received a 3,982 bids for over 54 crore shares, out of which 1,219 bids for about 12 crore were cancelled due to various reasons. The government received 2,763 valid bids for 42.04 crore ONGC shares while the government had planned to sell 44.77 crore shares.

Citigroup, Bank of America Merrill Lynch, HSBC, Morgan Stanle, Nomura and India's JM Financial have been appointed to provide the broking services for the deal.