Led by Indian Oil Corp, shares of oil companies on Friday shot up by as much as 19 per cent after the government virtually deregulated diesel, raising prices by 50 paise per litre and planned similar monthly hikes in future to cut record subsidies.
Shares of Indian Oil Corporation soared 18.7 per cent to Rs 375 -- its 52-week high level on the BSE.
Similarly, Hindustan Petroleum's scrip zoomed 9.51 per cent to a one-year peak of Rs 378.50, while BPCL surged 9.47 per cent to Rs 433.40, its 52-week high.
ONGC rose the most among Sensex stocks by 12.59 per cent to Rs 354.10, while Oil India was trading higher by 9.38 per cent at Rs 563.2.
Led by gains in these stocks, the BSE oil and gas index was trading at 9,585.58, up 3.25 per cent in late morning trade.
In bold reforms, the government yesterday moved towards deregulating diesel when it raised prices by 50 paise per litre and planned similar monthly hikes in future to cut record subsidies.
The decisions on diesel rate increase for retail and bulk consumers will cut subsidies by about Rs 15,000 crore on an annualised basis and by Rs 3,400 crore in remainder of FY13.
While the base hike in diesel price was 45 paise, it will lead to an increase of 50 paise in Delhi after including local VAT.
Rise in oil stocks fuelled rally in the stock market where the BSE benchmark Sensex was trading at 20,077.67, up 119.11 point sat 1130 hrs.