Oil shares gain up to 6.6%, Indian Oil Corporation, Hindustan Petroleum lead
Led by Indian Oil Corporation, oil shares today surged up to 6.6 per cent after the government virtually deregulated diesel prices allowing "small" hikes over a period of time.
Shares of Indian Oil Corporation jumped 6.60 per cent to settle at Rs 315.90 on the BSE.
Similarly, Hindustan Petroleum's shares zoomed 6.06 per cent to close at Rs 345.60, while BPCL rose by 3.75 per cent to Rs 395.90.
ONGC rose the most among Sensex stocks by 3.66 per cent.
Reliance Industries climbed 3.40 per cent.
Following gains in these stocks, the BSE oil and gas index shot-up by 3.11 per cent to 9,283.79 and was the top gainer among the 13 sectoral indices.
"This is a step in right direction as it will help the government in reducing the pressure on fiscal deficit. Both upstream and downstream companies will stand to gain as it will reduce their subsidy sharing burden and improve overall cash flows of the companies. Quantum of hike and periodicity would be the key things to watch out for," Motilal Oswal Securities said in a report.
Diesel prices in all probability may be hiked by Rs 1.50-2 per litre in the first instance that can be as early as tonight following the decision taken by the Cabinet Committee on Political Affairs (CCPA) headed by Prime Minister Manmohan Singh.
"As far as diesel is concerned, oil marketing companies have been authorised to make price correction from time to time," Oil Minister M Veerappa Moily said here. "It (price correction) can commence even from today."
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