PSU OMCs gain after recent slide in crude oil prices

Shares of two oil marketing companies rose 1.77% to 3.19% at 11:00 IST on BSE after recent sharp sell-off in international crude oil prices.

Meanwhile, the S&P BSE Sensex was down 6.97 points or 0.03% at 25,734.59.

BPCL (up 3.19%) and HPCL (up 1.77%) edged higher.

In the global commodities markets, Brent crude oil futures recovered from a sharp slide during the previous session. Brent for October settlement was currently up 66 cents a barrel at $43.35 a barrel. The contract had fallen $2.77 a barrel or 6.09% to settle at $42.69 a barrel during the previous trading session.

Decline in crude oil prices will reduce under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already decontrolled pricing of petrol and diesel.

Meanwhile, a fortnightly review of fuel prices from PSU OMCs is due at the month end. PSU OMCs undertake fuel price review at the middle of the month and at the month-end every month based on the trend in international oil market. PSU OMCs have been cutting petrol and diesel prices on the back of falling international crude oil prices.

Shares of Indian Oil Corporation (IOCL) dropped 1.57%. The finance ministry yesterday, 24 August 2015, announced that despite adverse market conditions, the Offer for Sale (OFS) for divestment of Government of India's 10% stake in Indian Oil Corporation (IOCL) through the stock exchanges mechanism was oversubscribed. The institutional investors' portion was subscribed 143% and the retail investors' portion was subscribed 18%. With total subscription of approximately Rs 11107 crore, the OFS was oversubscribed by 18%. The OFS was completed in a single trading session yesterday, 24 August 2015.

With this disinvestment, the Government of India's take in IOCL will come down to 58.57%.

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