Raamdeo Agrawal

Co-founder & director,

Motilal Oswal Financial Services

Uncertainty over the oil stocks has increased after

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the budget. The government has given no clear indications on the future of the oil companies, including the three oil marketing companies. The rise in excise duties is expected to hit the bottom lines of all oil refiners. However, retail prices of petrol and diesel, which have been increased by Rs 2.7 a litre and Rs 2.5 a litre, respectively, may somewhat neutralise the impact of excise duty hike. At present, most oil stocks are available at cheap valuations. The rise in marginal alternative tax to 18 per cent from 15 per cent will impact companies such as Reliance Industries and Cairn India. The fate of state-owned companies will depend on the decision taken on the recommendations of the Kirit Parikh committee. So far, the budget document has indicated that the petroleum ministry has demanded Rs 25,300 crore towards subsidy to OMCs against the estimated losses of Rs 31,100 crore. The government must come up with some stable long-term policies to safeguard the interest of minority stakeholders.