HPCL, BPCL, IOC shares: OMCs tumble up to 4% on likely cut in petrol, diesel prices 

Shares of Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation Ltd tanked up to 4 per cent in Friday's trade amid reports of a likely cut in petrol and diesel prices, ahead of the general elections in May next year. 

Sources told Business Today the price reduction is likely to be in the range of Rs 4-Rs 6 per litre. They said discussions are underway with OMCs to provide the relief to common man and "a proposal is under consideration for government and OMCs to bear equal burden of price cut."

Following the report, shares of BPCL fell 3.76 per cent to hit a low of Rs 448.50 on BSE. HPCL, which climbed 9.38 per cent in the previous session, tanked 4.49 per cent to hit a low of Rs 399. IOC, on the other hand, declined 3.78 per cent to hit a low of Rs 128.25. 

"Despite the recent rally in OMCs, we believe stock prices are yet not fully reflecting long-term sustainable marketing margins. However, near term, a combination of potential inventory loss and proximity to general election will likely limit upside in margins," BOB Capital Markets said in a recent note.

Read more: Govt considering reduction in prices of petrol, diesel soon: Sources

Sources told BT that Union government was in the favour of fuel price cut, as crude oil prices have been moving in the $70-$80 per barrel range for the last three months. In fact, the Centre might also mull higher price cut of up to Rs 10 per litre, the BT report suggested, adding that a fuel price cut will ease retail inflation that hit a three-month high of 5.55 per cent in November.

The BT report noted that the Petroleum Ministry and Finance Ministry held discussions recently and submitted options to Prime Minister's Office regarding this. These two ministries, the report noted, hold discussions every fortnight on fuel prices.