IOC, HPCL, BPCL surge 5% in falling markets

A day after the government announced issuance of Rs 22,000 crore oil bonds to state-run oil marketing companies, shares of IOC, HPCL and BPCL surged as much as five per cent on the bourse, even as the benchmark Sensex suffered a loss of 400 points in the early trade today.

Indian Oil Corporation climbed 3.29 per cent to Rs 379.95 in morning trade. It was later trading at Rs 377, up 2.54 per cent on the Bombay Stock Exchange.

Also Hindustan Petroleum Corporation ascended 5.17 per cent to an intra-day high of Rs 224.70, while Bharat Petroleum Corporation jumped 3.23 per cent to Rs 330.90.

However, the Sensex, snapping two-session winning streak, fell by over 400 points in early trade on selling by foreign funds and retail investors following weak global cues.

Government yesterday said it would issue oil bonds worth Rs 11,975.51 crore to IOC, Rs 4,693.73 crore to BPCL and Rs 5,330.76 crore to HPCL to help cash-strapped oil marketing companies (OMCs) overcome their financial problems.

The bonds issued are aimed at helping the oil companies, which are reeling under financial pressures on account of huge under-recoveries.

"The special bonds are being issued to three OMCs as compensation toward estimated under-recoveries on account of sale of sensitive petroleum products during the current financial year," the finance ministry said in a statement.

The three oil OMCs lost about Rs 92,853 crore on fuel sales in the first six months (April-September) of the current fiscal. They are expected to lose another Rs 35,282 crore in the second half of 2008-09.

HPCL was later quoting at Rs 216.80, up 1.47 per cent, while BPCL was trading at Rs 325, up 1.39 per cent on the BSE.