Nomura said the rally in India's state-run oil companies on Friday, spurred by the government's announcement to allow higher diesel prices, was excessive and the action would not lead to any improvement in the bottom line of these companies.

"We reiterate that yesterday's actions are not a big reform, and there may not be much reduction in oil marketing companies' overall under-recoveries," Nomura wrote in a note on Friday.

"Also, even as under-recoveries reduce, these may not result in any improvements in the bottom line of companies, in our view," the analysts added.

Nomura maintained its 'reduce' rating on Oil and Natural Gas Corp and Oil India Ltd.

Shares of state-run companies surged for a second session on Friday after the government's diesel announcement.