Oil stocks drop on petrol price control report

The stock prices of oil marketing companies (OMCs) came under pressure on Wednesday on the back of a report that the government was planning to roll back its petrol de-control policy announced in 2010.

Even as the Bombay Stock Exchange (BSE) Oil&Gas index rose marginally by 0.32 per cent, the share prices of companies including Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), Indian Oil Corporation (IOC) and ONGC fell 0.7 to 2 per cent.

The report from a wire service said the petroleum ministry was considering a plan to return to the regulated price regime for petrol, as a persistent increase in the auto fuel’s price was “untenable” and union petroleum minister S Jaipal Reddy was in no mood to pass on the burden to consumers. The report, however, was denied by the government.

The price of global crude has risen to over $105 a barrel on the New York Mercantile Exchange, considered to be the global benchmark for crude. The price has gone up due to excessive speculative positions in crude futures on the back of ongoing tensions in West Asia.

After the report was termed false, market players reacted to it by saying that OMC share prices would remain strong as they were likely to report good quarterly results. “OMCs are sitting on huge inventory gains, which is why they will continue to post strong results for the fourth quarter too,” said Kishor Ostwal, managing director of CNI Research.

The stocks managed to recover some ground after the government clarification. BPCL, which had touched a low of Rs 543 on the Bombay Stock Exchange, closed the day at Rs 551.3. It was down 1.98 per cent from its closing price on Tuesday. HPCL recovered from the day’s low of Rs 308 to close at Rs 319.55. The stock was down 1.27 per cent from its previous close. IOC was down 0.73 per cent at Rs 307.4. It recovered from the day’s low of Rs 302.6. ONGC was down 0.2 per cent at Rs 271. The stock had touched a low of Rs 266 on BSE. The index managed to gain due to a nearly one per cent rise in the share price of Reliance Industries, which was up on the news of an increase in gas production from next month. The benchmark index Sensex was down 0.16 per cent.