Oil stocks rally up to 7% on fuel reforms

Stocks of state-owned oil marketing companies BPCL, HPCL and IOC were in limelight today, surging up to 7.3 per cent, as diesel deregulation will cut subsidy burden of these companies.
Hindustan Petroleum Corporation Ltd gained 7.28 per cent to settle at Rs 526.95, while shares of Bharat Petroleum Corporation Ltd surged 4.57 per cent to Rs 696.55 on the BSE.
Shares of IOC were up 3.84 per cent to Rs 379.60.
Buying was also seen in other oil and gas stocks, with ONGC surging 5.44 per cent, Petronet LNG (3.69 per cent), GAIL (2.41 per cent), OIL (1.39 per cent).

The BSE oil and gas index ended at 10,746.97, up 1.94 per cent.
"The raise on natural gas prices, combined with deregulation reforms on the government's previous control of diesel prices, allowed the markets to surge further," said Raghu Kumar, Cofounder, brokerage firm RKSV.

In a major reform push, the government has deregulated diesel prices but hiked natural gas tariff by 46 per cent that will push up fertiliser, power, CNG and PNG rates.
The government deregulated diesel prices that resulted in a price cut of Rs 3.37 a litre.
"Markets were clearly enthused by the intent shown and key decisions taken for the oil & gas sector," said Devang Mehta, Senior VP & Head - Equity Advisory, Anand Rathi Financial Services.

The gas price hike, according to a modified formula approved by the Cabinet, comes to USD 5.61 per mmBtu on gross-calorific value basis and USD 6.17 as per net calorific value - the principle used for calculating current USD 4.2 rate.
In the stock market, the BSE benchmark Sensex ended at 26,429.85, up 321.32 points.