Oil and gas stocks gained sharply on Thursday tracking a fall in oil prices to a two-week low, despite a huge sell-off in the Indian stock market amid a rout in global stock markets. Shares of oil marketing companies like Hindustan Petroleum Corp (HPCL), Indian Oil Corp, Oil and Natural Gas Corp, Bharat Petroleum Corp, and GAIL India climbed between 4-19.8% on the domestic bourses.
In addition, oil stocks got a boost on reports that the oil marketing companies may not have to bear any additional burden of higher oil subsidies. “Our markets slumped from the word go, on back of such extremely weak global cues… Energy stocks especially oil markets companies bucked the trend on the hope that they will not have to bear excess subsidy burden,” said VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities.
Hindustan Petroleum Corp (HPCL) shares soared 19.8% to an intra-day high of Rs 216.40 per share on the NSE, marking its sharpest intra-day climb in over 7 years. Shares of Indian Oil Corporation surged 8.02% to Rs 133.95 intra-day, Oil and Natural Gas Corporation rose 7.4% to Rs 159.60, Bharat Petroleum Corporation edged up by 7.2% to Rs 284.50 and GAIL India was up 4.65% at Rs 352. On the BSE, the S&P BSE oil and gas index climbed 5%, its biggest intraday jump since in over four years.
Also read: Share market HIGHLIGHTS! Sensex closes tad above 34,000, Nifty down 225 points; financials, IT stocks drag
Amid a global stock markets rout, oil prices slumped to two-week lows on Thursday. In addition, investor sentiment turned more bearish by an industry report that showed US crude inventories rose more than expected. Following the report findings, Brent crude fell $1.74 a barrel to a low of $81.35, its lowest since September 27, before recovering a little to trade around $81.70, a Reuters report showed. Brent had lost 2.2% on Wednesday. Earlier on October 3, it hit a four-year high of $86.74.
While fall in oil prices supported the rise in oil companies stocks, a report which said the government may not share the burden of increased oil subsidy too gave a boost to the oil and gas sector. According to a Reuters report which cited Finance Ministry sources, the government has no intention to ask the oil companies to share increased subsidy burden. The government had recently reduced petrol and diesel excise duties by Rs 1.5 per litre and had also asked the OMCS to cut the retail price of both diesel and petrol by ₹1 per litre.