Shares in Oil & Natural Gas Corp rose as much as 3.6 per cent on Thursday as part of a rally across oil companies after the oil ministry moved a proposal to raise diesel prices to the federal cabinet.
India's oil ministry has proposed to raise diesel prices by 1 rupee per month for 10 monhts and to increase the number of subsidised cylinders.
ONGC shares rose 3.1 percent as of 0416 GMT. Hindustan Petroleum Corp gained 2 percent, while Bharat Petroleum Corp rose 2.1 percent. Indian Oil Corporation was up 3.8 percent.
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Oil stocks gain up to 4% on hopes of hike in fuel prices
Mumbai, Jan 10 (PTI) Oil stocks today rose by as much as 4 per cent following the Oil Ministry's proposal to hike diesel rates by Rs 3-4.50 per litre.
Shares of IOC gained 3.59 per cent at Rs 297.95 Ė 52- week high. Similarly, HPCL gained 2.38 per cent at Rs 345.30, while BPCL's scrip moved up by 2.97 per cent to Rs 395.85.
ONGC, too, surged 2.06 per cent.
Led by the gains in these stocks, the BSE oil and gas index was trading 0.62 per cent up at 8,950.51 in the late morning trade.
Analysts said stocks of oil companies were in demand on hopes of a hike in fuel prices that would reduce their subsidy burden and improve revenues.
On diesel, the ministry has proposed a 3-4.50 per litre hike in one go or in monthly instalments of Re 1 or Rs 1.50 per litre. From April, it wanted Re 1 a litre increase every month till such time that the current loss of Rs 10.16 is wiped out.
Rally in these stocks was contrary to an overall sluggish equity market, where the BSE benchmark Sensex was trading flat at 19,671.79 at 1130 hrs.