Oil stocks up 10.5% on diesel price hike
Mumbai: Oil and gas stocks Friday closed with gains of as much as 10.5 percent on the back of partial deregulation in diesel prices.
Shares of Indian Oil Corporation settled 10.46 percent higher at Rs 348.95 on the BSE. Intra-day, the stock surged 18.7 percent to Rs 375 -- its 52-week high level.
BPCL was up 9.64 percent at Rs 434.05, while Hindustan Petroleum's scrip climbed 4.99 percent to settle at Rs 362.85.
ONGC rose the most among Sensex stocks -- by 7.31 percent, adding Rs 19,677 crore to its market value.
Oil India's scrip zoomed 8.95 percent.
Following the gain in these stocks, the BSE oil and gas index ended at 9,571.03, up 3.09 percent.
"Hike in diesel prices and partial deregulated approach towards future price changes led to massive buying in oil marketing companies. ONGC, BPCL reacted extremely positive to the development," said Nagji K Rita, Chairman & MD, Inventure Growth & Securities.
He added, however, "While on one hand the move is favourable for these companies, on the other hand it could have an inflationary impact."
In bold reforms, the government yesterday moved towards deregulating diesel when it raised prices by 50 paise per litre and planned similar monthly hikes in future to cut record subsidies.
The decisions on diesel rate increase for retail and bulk consumers will cut subsidies by about Rs 15,000 crore on an annualised basis and by Rs 3,400 crore in remainder of FY'13.
While the base hike in diesel price was 45 paise, it will lead to an increase of 50 paise in Delhi after including local VAT.
Rise in oil stocks fuelled rally in the stock market where the BSE benchmark Sensex ended at 20,039.04, up 75.01 points.