OMC Stocks Rally Up To 3% Following Second Domestic Fuel Price Increase
Shares of Indian state-run OMCs traded higher on Tuesday morning. The rally follows a second consecutive domestic fuel price hike within a week, driven by rising global crude costs amid the US-Iran conflict. Additionally, sentiment was boosted by Indian Oil Corporation reporting a 78% year-on-year jump in its Q4 net profit to ₹14,458 crore.
- Republic Business
- 2 min read
Shares of Indian state-run oil marketing companies (OMCs) climbed up to 3% on Tuesday morning. Investors cheered a fresh round of domestic fuel price hikes and robust quarterly corporate earnings.
As of 10:18 AM, the Nifty Oil & Gas index rose 0.64%. This came as state-run retailers adjusted fuel prices for the second time in less than seven days to combat volatile global crude markets.
Fuel Price Drive Sector Gains
Retail prices for petrol and diesel increased by roughly 86 paise and 83 paise per litre across India on Tuesday. This follow-up revision pushes petrol prices in New Delhi to ₹98.64 per litre and diesel to ₹91.58 per litre.
The immediate price relief for oil retailers triggered strong buying in the morning trade. Shares of Indian Oil Corporation (IOC) surged 3% to hit an intraday high of ₹135.63 on the National Stock Exchange (NSE). Hindustan Petroleum Corporation (HPCL) shares gained 2.15% to trade at ₹366.50. Meanwhile, Bharat Petroleum Corporation (BPCL) opened nearly 2% higher before paring minor gains in a volatile broader market.
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City gas distributors also mirrored the momentum. Indraprastha Gas Limited (IGL) rose 2.10% after raising compressed natural gas (CNG) prices by ₹1 per kg over the weekend.
IOC Q4 Profit Surges 78%
Market sentiment received a major boost from Indian Oil's earnings report released late Monday. The refining giant announced a 78% year-on-year surge in its consolidated net profit for the fourth quarter. Net profit reached ₹14,458 crore, up from ₹8,123 crore in the same period last year.
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IOC's revenue from operations for the January-March quarter grew 7% to ₹2.37 lakh crore. Strong refining margins and steady revenues from the core petroleum business drove the performance. The positive earnings beat came despite significant marketing losses from freezing retail prices earlier in the year.
Global Geopolitical Pressures Loom
The domestic price revisions are a direct response to escalating global crude oil prices. Escalating geopolitical tensions between the US and Iran have disrupted vital trade lanes through the Strait of Hormuz. Global crude prices have climbed more than 50% since the start of the conflict.
While the fuel price hikes improve current marketing margins, sector experts note that state-run OMCs still encounter daily operational losses on crude processing. However, massive volume trading in early hours shows high institutional confidence. Total traded volume for IOC crossed 73.35 lakh shares by mid-morning, outperforming the benchmark BSE Sensex, which gained 0.38% to stand at 75,656.