Investors are not in a rush to buy oil sector stocks despite the Prime Minister’s statement that fuel prices need to be rationalised.
The BSE’s Oil and Gas index rose about 70 points in morning trade on Monday but this appeared more due to the overall buoyancy in investor mood with the Sensex trading up over 100 points.
The oil companies have been asking for the green signal for quite some weeks to raise petrol price because of the rise in crude oil prices. But elections in several States appeared to have delayed any decision on this.
There was a general increase in the oil industry stocks this morning but there was no indication of any heightened investor interest in the oil and gas stocks as the gain in most of the stocks was less than one per cent.
BPCL was trading at Rs 673.45, a gain of Rs 6.45 or 0.97 per cent, HPCL was trading at Rs 299.50, down by 35 paise and Indian Oil Corporation was quoting at Rs 261.25, an increase of Rs 1.70 or 0.65 per cent.
Cairn India moved up to Rs 342.60, a gain of Rs 4.60 or 1.36 per cent. GAIL India was trading at Rs 333.50, a gain of Rs 3.30 or 1 per cent, Gujarat State Petroleum was up by 75 paise to Rs 66.95 and Oil India was down by 70 paise to Rs 453.15. ONGC was trading at Rs 266.05, a gain of Rs 2.20, Petronet LNG shed 95 paise to trade at Rs 139.50 and Reliance Industries gained Rs 4.90 to trade at Rs 744.80.
Much of the rise in oil and gas index was contributed by the increase in the share prices of Reliance and ONGC that together have about 75 per cent weightage in the index.
The Prime Minister had spoken on fuel price rationalisation after inaugurating the Bathinda refinery in Punjab on Saturday. He said rising crude oil prices put a severe strain on the import bill even while stressing the need to shield the poor and needy from the impact of such rationalisation.
This gave rise to expectations of deregulation in the oil sector, dominated by the PSUs and whose losses, to an extent, are subsidised by the Centre.
However, investors may stay sceptical about the scale of implementation given the imperatives of coalition politics with key allies opposed to any oil sector deregulation, particularly diesel prices.