Indian oil marketing companies, and exploration and production oil firms were sharply higher in heavy volume as funds bought after the government deregulated prices of gasoline Friday, saying it will gradually free diesel prices.
BSE Oil & Gas Index was up 1.9% versus the benchmark Sensex at just 0.7%.
“Funds are building positions as the sector has been pressured for months now and stocks have been under-owned,” says an analyst at a foreign brokerage.
OMCs have hitherto had to sell cooking, auto fuels at state-set prices to help control inflation, leading to revenue losses. Indian Oil Chairman B.M. Bansal said he expects the recent price rise to narrow the revenue loss on the sale of oil products to 850 million rupees a day versus 1.2 billion rupees a day previously.
Indian Oil shares were last up 7.6%, Bharat Petroleum climbed 3.3% and Hindustan Petroleum rose 6.2%. Explorers were also higher with Oil & Natural Gas gaining 3.3% and Oil India rallying 7.6% on expectations they can now offer lower discounts to OMCs for selling retail fuel at state-set prices.
