State-owned oil refiners and marketing companies like HPCL, IOC and HPCL witnessed huge sell off on reports that the government may ask them to share the burden of higher petrol and diesel prices.
The stocks were down 4-8 per cent, dragging BSE Oil and Gas Index by 3.45 per cent, making it one of the worst performing sector.
Indian Oil Corporation (IOC) hit its 52-week low to close at Rs 153.40 (4.92 per cent), while Hindustan Petroleum Corporation (HPCL) closed at Rs 286.25 (down 8.36 per cent) and Bharat Petroleum Corporation (BPCL) fell 5.56 per cent to close at Rs 376, on reports that the government may ask these companies to freeze prices as a temporary arrangement. Oil and Natural Gas Corporation (ONGC) and Oil India closed at Rs 175.35 (down 5.32 per cent) and Rs 230 (down 3.81 per cent), respectively.
According reports, the PMO has been provided data and inputs from OMCs and discussions have been going on regarding an excise duty cut, and a decision is imminent. Oil stocks were experiencing the heat of selling amid surging global crude oil prices.
The Indian market has been on a weak wicket owing largely to the reaction to rising crude oil and the slide in the rupee.
Rahul Aggarwal, director, Wealth Discovery, said: “Petrol and diesel prices are at the highest levels and bowing to populist pressure the government has finally swung into action. A special meeting was held to devise a strategy to provide some relief to the customers.”
He added: “This is bad news for the OMCs as the move is directly going to hit their bottomlines. OMC counters were hit hard as a reaction It is expected that the current trend may continue in the near term and weakness in the performance of OMC stocks may persist as there is no indication that global crude oil prices are going to cool off around $70 per barrel at-least in the short term.”