The Hindu Business Line : Cairn, Reliance Petroleum tumble as crude takes a knock

Mumbai, July 16 Shares of private oil refining companies Cairn India and Reliance Petroleum slumped on Wednesday as international crude price closed down $6.44 at Rs 138.74-a-barrel on Tuesday, a sharp fall on a single day.

Crude was hovering around $134.05, a drop of 3.39 per cent over Tuesday close at 830 IST on the NYMEX.

These stocks fell more than the benchmark index, the BSE Sensex, which closed down 0.79 per cent from its previous day’s close.

Cairn was down Rs 11.50 or 4.88 per cent and closed at Rs 224.35; Reliance Petroleum dropped 4.8 per cent or Rs 7.75 and closed at Rs 153.75.

However, Essar Oil closed up 0.95 per cent or Rs 1.65 at Rs 175.65.

Windfall tax

“Cairn will benefit from the high crude prices as it has its own oil fields. The stock saw a lot of selling today as the crude price fell sharply on Tuesday. The issue of the likely imposition of the windfall prift tax on private oil companies has also impacted the share price of Cairn today,” said Mr Sanjay Someshwar, a sub-broker with Ventura Securities.

The stock, which opened at Rs 231.80, touched an intra-day high of Rs 233.60 and a low of Rs 218.60, before closing lower at Rs 224.35.

In the last one week alone, the stock fell 6 per cent and in the last one month it has lost 20 per cent.

Besides drop in oil price and reports of windfall profit tax, marketmen fear that the company might have to pay a cess for its production from Rajasthan.

Reliance Petroleum share price fell on Wednesday mainly due to the issue of the windfall profit tax, said analysts.

The Samajwadi Party has been insisting imposition of a windfall profit tax and withdrawal of concessions to private oil companies.

RPL opened at Rs 162.80 and touched an intra-day high of Rs 163.75 and a low of Rs 152.15.

The stock has fallen more than 9 per cent during the last one week and close to 15 per cent in the past one month.

On the other hand, shares of marketing companies moved up today. BPCL was up 3.06 per cent and closed at Rs 252.55 and HPCL closed up 1.88 per cent at Rs 197.85.

“The drop in crude price in turn will reduce the subsidy burden of oil marketing companies and this is the reason why these stocks gained today,” said Ms Anita Gandhi, Head of Institutional Business at Arihant Capital Markets.