The partial deregulation of oil prices on Friday lifted the shares of oil marketing

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companies while manufacturers of commercial vehicles and tyres saw their stocks sliding on negative sentiment.

Shares of commercial vehicle manufacturers and tyre makers fell between 1.5 and 3 per cent after the government raised the price of petrol by Rs 3.5 per litre and diesel by Rs 2 per litre. Stocks of oil marketing companies soared between 6 and 14 per cent.

While Mahindra & Mahindra fell 2.81 per cent to Rs 614.70, Tata Motors shed 1.97 per cent at Rs 769.45 and Ashok Leyland lost 1.73 per cent at Rs 62.40. Carmaker Maruti Suzuki bucked the trend to close at Rs 1,397.05, up 0.92 per cent, on the Bombay Stock Exchange.

Hindustan Petroleum Corporation was the top gainer as its shares rose 13.66 per cent to Rs 401.05. Other gainers included Bharat Petroleum Corporation, up 12.84 per cent at Rs 621.35; Indian Oil Corporation, up 10.39 per cent at Rs 377.30; ONGC, up 6.35 per cent at Rs 1,264; and Essar Oil, up 6.45 per cent at Rs 137.75. Reliance Industries rose 1.14 per cent to Rs 1,063.25.

The BSE oil and gas index was the biggest gainer (2.88 per cent) of the day which saw both the Sensex and the Nifty losing close to 1 per cent.

“Stocks of oil marketing companies (OMCs) will continue to be strong. All three OMCs are likely to see earnings upgrades in the range of 20-25 per cent and we believe there is some steam left even after today’s rally,” said Alok Deshpande, research analyst (oil and gas), Elara Securities (India).

He said, following the deregulation of petrol and diesel prices, Reliance and Essar are likely to aggressively pursue their retail strategy again. "For Reliance, which is operating only half of its 1,400 outlets at present, it may take some time to restart the rest, but Essar has been operating its outlets and will now start to benefit from the level playing field."

Naresh Nayyar, managing director and chief executive officer of Essar Oil and CEO of Essar Energy, said in a statement, "The government decision reinforces our belief in India's market potential that can be better realised in a deregulating market environment."

He said the move would benefit consumers in the long run through competitive pricing of fuel products and better service at outlets.

“As the largest active private sector fuel retailer in India, we are well placed to capture additional sales for fuel and non-fuel items and expect to see significant volume growth in both areas,” he said.

Gaurav Dua, head of research at Sharekhan, said, “There will be marginal fundamental impact on sales and share prices of auto companies.”

Another automobile analyst with a domestic brokerage said it was difficult to take a short-term call on the impact of higher petrol and diesel prices on stocks of automobile companies like Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hero Honda and Bajaj Auto, among others.

Maruti Suzuki has been seeing renewed interest in its shares over the past few days. There might be a short-term impact on Maruti’s sales since most of its models run on petrol. “However, the impact will be negated since all Maruti products have better fuel efficiency than their competitors,” the automobile analyst said.

The impact on Tata Motors and Mahindra & Mahindra is likely to less because most of their vehicles are powered by diesel. Another analyst said even their pricing would provide some cushion because their products have a higher price tag and are targeted at individuals with sound financial background.

The BSE automobile index lost 0.91 per cent while Sensex fell 0.88 per cent to 17,574.53 points.

Among tyre makers, MRF lost 1.69 per cent and Apollo 1.46 per cent.

On the New York Mercantile Exchange, crude oil contracts for immediate delivery were quoted between $76 and $77 a barrel.