Meanwhile, Cairn Energy was driven 10p higher to 1,090p as bears closed their short positions in the stock. Those who turned negative on the stock before last month's drilling news from the oil and gas explorer were likely to have had a very merry Christmas.
Shares in the group slumped 25 per cent in the wake of the update, which not only failed to contain any new discoveries at its Rajasthan fields but brought news of a new tax demand from the Indian government on the company.
According to bears, Cairn was ripe for shorting before its statement for two reasons. First, its shares had already risen300 per cent in the previous 12 months, meaning there was already a lot of hope priced into the company's valuation. Second, a week before the update, Cairn, for the first time in years, put out a statement simply alerting investors to the fact that it would be issuing a drilling update in seven days. Bears viewed this as an opening move by a company trying to massage down market expectations.
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