The correct answer is: E. No error
The sentence is grammatically correct. The phrase “in spite of” is used to introduce a clause that expresses a contrast to the main clause. In this case, the main clause is “Ramlal bought more shares of that company.” The phrase “of an impending takeover” is a prepositional phrase that modifies the noun “rumours.” The phrase “by the government” is a prepositional phrase that modifies the noun “takeover.”
The sentence can be paraphrased as follows: “Even though there were rumours of an impending takeover by the government, Ramlal bought more shares of that company.”