The Hindu Business Line : Oil stocks surge on price hike

Brokers and analysts said with this price hike, the subsidy burden on various oil PSUs will come down in the current quarter and future quarters. The fall in international crude prices in the last few days will also benefit them.

In Friday's trading, the BSE Oil & Gas index gained 2.11 per cent compared to the BSE Sensex gain of 1 per cent. There was an across-the-board buying in oil and gas companies shares. However, the magnitude of the price rise was different. This was due to the different subsidy burden taken on by the companies.

Friday's major gainer was BPCL (up 11.73 per cent at Rs 397.30 on the BSE). Other stocks to gain include HPCL (up 7.21 per cent at Rs 475.34), IOC (up 6.80 per cent at Rs 475.85), IBP (up 2.37 per cent at Rs 539.95), ONGC (up 1.44 per cent at Rs 806.60) and GAIL (up 1.27 per cent at Rs 211.45).

According to Mr Arun Kejriwal, Investment Strategist, Angel Broking, "Integrated refinery have shot up because of under recovery and will reduce to the extent of price rise. Further, falling crude prices will benefit them as the input cost will also be reduced."

In the second quarter, most of the integrated oil refinery companies reported a decline in net profits due to the increased subsidy burden they had to take on, as they could not increase the price of petrol and diesel.

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