Mumbai: Oil stocks on Thursday rose by as much as 4 percent following the Oil Ministry's proposal to hike diesel rates by Rs 3-4.50 per litre.
Shares of IOC gained 3.59 percent at Rs 297.95 -- 52- week high. Similarly, HPCL gained 2.38 percent at Rs 345.30, while BPCL's scrip moved up by 2.97 percent to Rs 395.85.
ONGC, too, surged 2.06 percent.
Led by the gains in these stocks, the BSE oil and gas index was trading 0.62 percent up at 8,950.51 in the late morning trade.
Analysts said stocks of oil companies were in demand on hopes of a hike in fuel prices that would reduce their subsidy burden and improve revenues.
On diesel, the ministry has proposed a 3-4.50 per litre hike in one go or in monthly instalments of Re 1 or Rs 1.50 per litre. From April, it wanted Re 1 a litre increase every month till such time that the current loss of Rs 10.16 is wiped out.
Rally in these stocks was contrary to an overall sluggish equity market, where the BSE benchmark Sensex was trading flat at 19,671.79 at 1130 hrs.