The spike in crude oil prices has brought cheer to exploration and production companies, even as refiners turn cautious. The stock market, however, meted the same treatment to downstream and upstream oil companies.
Indian Oil Corporation led the fall with a 7.6 per cent drop, while Bharat Petroleum and Hindustan Petroleum fell 3.8 per cent and 5.4 per cent, respectively. Oil and Natural Gas Corporation, the nation's largest exploration company, fell nearly four per cent, and Oil India 3.3 per cent. Reliance Industries fell 1.3 per cent to Rs 879.25.
"The spike in crude oil prices is negative for oil marketing companies as the fear of under-recoveries will always be there. And, if prices go up further, despite diesel deregulation, one is not sure if the government will intervene and allow retail price revisions," said Dhaval Joshi, research analyst at Emkay Global Financial Services.
Last month, Vedanta said it had taken a Rs 19,180 crore impairment on its $8.7-billion acquisition of Cairn India to reflect its expectation that oil prices would remain weak for some time. Vedanta owns 59.9 per cent of Cairn India, which it bought in 2011. The $3.1-billion impairment reflects the high price Vedanta paid for Cairn India at the peak of the oil cycle, when Brent exceeded $100 a barrel.
Cairn India reported a net loss of Rs 1,044 crore in the quarter ended March. The company had reported a net profit of Rs 1,755 crore in the same quarter last year. Total income during the quarter dipped 44 per cent to Rs 1,665 crore "on account of lower crude prices and lower volumes," the company said.
Reliance Industries, on the other hand, reported its highest quarterly profit in seven years at Rs 6,381 crore, up 8.5 per cent for the January-March quarter of 2014-15. Net profit for the corresponding quarter of the previous year was Rs 5,881 crore.
Reliance Industries' consolidated turnover for the March quarter was down 33.3 per cent at Rs 70,863 crore mainly due to a 50 per cent yearly fall in the benchmark oil price.
"Higher crude oil prices are necessary for us to generate sufficient surplus. The minimum price we expect is $60 a barrel so that we can look at future investments," an ONGC executive said.
ONGC's net realisation had dropped to $41.36 a barrel in the first nine months of 2014-15, nearly the same as in 2013-14, the lowest ever. Realisation fell sharply in the December quarter due to low crude prices and a bigger share of the fuel subsidy burden ONGC had to bear.