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Shares of oil marketing companies tumbled as much as 29 per cent in the morning trade as the government had on Thursday announced a lowering of excise duty by ₹1.50 a litre.
It also asked the public sector oil marketing companies — Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation — to cut prices by ₹1 a litre. These measures will bring down petrol and diesel prices by ₹5 per litre.
Following the announcement, shares of oil marketing companies (OMCs) lost significant ground. Brokers said the downtrend was a knee-jerk reaction. Market experts said the fuel price cut would have negative implications for upstream public sector companies.
Shares of Indian Oil Corporation opened weak at Rs 126.80, then fell further to its 52-week low of Rs 105.65, down 24.99 per cent over their previous closing price on the BSE.
Similar movement was seen on Bharat Petroleum counter as well where the stock dipped to its 52-week low of Rs 239, down 28.94 per cent on the BSE. Hindustan Petroleum also fell to its 52-week low of Rs 165.45, down 25 per cent over its last closing price.
On the NSE, too, all the three oil marketing companies fell to their 52-week low level.
“The government’s decision to curtail marketing margins on auto fuels by Rs1/litre brings to fore the earnings uncertainty for oil PSUs, associated with an environment of higher crude prices amid the government’s socio-economic compulsions,” Kotak Institutional Equities said in a research note
More than 24.4 million BPCL shares changed hands vs 30-day avg of 5 million, 38 million HPCL shares vs 5.8 million 30-day average and 41.2 million IOC shares vs 7.3 million 30-day average.
BPCL recorded biggest intra-day percentage loss since May, 2004, and HPCL, IOC since January 2008. IOC fell to its lowest in over 15 months, BPCL in over 19 months and HPCL in over 18 months.
** HSBC said combination of 1.5 rupees/litre excise tax cut and likely lower dividends from OMCs expected to cost 0.1 pct of GDP in current year
** YTD as of Thursday's close, IOC had fallen 27.8 pct, HPCL 48.1 pct and BPCL down 36 pct
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