OMCs extend rally on drop in oil prices

At 1016 hours, BPCL was up 3% at Rs 929, while HPCL and IOC were up 2% each at Rs 788 and Rs 423 respectively.

Shares of oil marketing companies (OMCs) were trading higher by upto 3%, extending their recent gains on the bourses, after a sharp drop in crude oil prices.

At 1016 hours, Bharat Petroleum Corporation (BPCL) was up 3% at Rs 929, while Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) were up 2% each at Rs 788 and Rs 423 respectively on the Bombay Stock Exchange (BSE). The S&P BSE Sensex was down 0.77% or 216 points at 27,877.

These stocks are trading at multi-year highs, having rallied  between 25% and 50% thus far in 2015 compared to a sub-2% rise in the benchmark index.

The US benchmark West Texas Intermediate for delivery in August plummeted $1.88 to $55.05 a barrel and Brent crude tumbled 50 cents to $59.82 in late-morning Asian trades. CLICK HERE TO READ FULL REPORT.

Meanwhile, according to analysts at Nomura, this financial year will be a defining year for public sector undertakings in the oil sector. They expect an increase of 53-134% in earnings, as the full impact of reforms in oil marketing (diesel deregulation, cooking gas direct benefits transfer, etc) and a sharp decline in oil prices will be visible.