IOC, HPCL, BPCL stocks rise on higher price realisation

Public sector oil marketing companies' (OMC) stocks surged on Monday on the back of lower international crude oil rate and recent hike in diesel prices.

At the Bombay Stock Exchange (BSE), the stock of  Indian Oil Corporation (IOC) was up 4.30 per cent  or 352.55 points from its previous close of Rs 338.

The scrip touched an intra-day high of Rs 359.50 and a low of Rs 338.

Bharat Petroleum Corporation's (BPCL) stock gained 5.78 per cent or 35.45 points at Rs 648.20 from its previous close of Rs 613.15.

The stock touched a high of Rs 658.10 and a low of Rs 613.20.

Hindustan Petroleum Corporation's (HPCL) scrip stood at Rs 440.55, up 26.55 points or 6.41 percent from its previous close of Rs 414.

According to market analysts, the fall in global crude prices and subsequent increases in diesel prices have led to positive sentiment that the OMCs will be able to come out with positive earnings figures.

Despite geo-political tensions in Iraq and ongoing dispute between Russia and Ukraine, the Brent crude has declined to $102 per barrel, its lowest since a year ago.

Even the first quarter earning results of the OMCs have led to positive buying sentiment.

On July 31, diesel rates were hiked by 50 paise a litre. The latest diesel price hike was in line with the government's 2013 January authorization for oil marketers to increase selling price within a small range every month.

The under-recovery, or revenue loss, applicable on diesel for the first fortnight effective Aug 1, has been pegged sharply downwards at Rs.1.33 per litre. The OMCs are now incurring combined daily under-recovery of about Rs 226 crore on the sale of diesel

The under-recoveries for the financial year 2014-15 are projected to be Rs.91,665 crore while the figure was Rs 1,39,869 crore in 2013-14

Currently, the three OMCs sell diesel, domestic LPG, and kerosene at government-fixed prices which are below market rates.

The losses incurred due to this are refunded through government subsidy and discounts by oil exploration companies such as ONGC and OIL.