New Delhi: Stock prices of all major oil marketing companies (OMC) deep-dived as soon as finance minister Arun Jaitley announced a Rs 2.50 cut in retail prices of fuel, of which OMCs are to absorb one rupee a litre.
The otherwise welcoming decision by the Centre resulted in stocks falling to 52-week lows for HPCL and BPCL while shares of IOC recovered a bit after hitting a one-year low.
Taking stock prices at 3:15 pm as the base, individual fall for the OMCs are 21.13 per cent (HPCL), 2.13 per cent (OIL), 11.61 per cent (IOCL), 11.78 per cent (BPCL).
The Centre on Thursday cut petrol and diesel rates by Rs 2.50 a litre with effect from midnight.
The decision was announced by finance minister Arun Jaitley after he held a closed-door meeting with Prime Minister Narendra Modi and petroleum minister Dharmendra Pradhan.
The Centre has reduced central excise duties by Rs 1.50 a litre, while oil marketing companies asked to absorb Re 1 a litre, Jaitley said.
This year alone, petrol and diesel prices have been hiked by Rs 13.91 and 15.59 respectively in the national capital. Prices have seen a similar hike in other cities as well.
Jaitley said that the excise duty cut would have an impact of Rs 10,500 crore on central government's tax revenues. The Central government charges Rs 19.48 excise duty on a litre of petrol and Rs 15.33 on diesel.
The finance minister added that the central government will not go back on deregulation of fuel prices. "We have to react to the situation and give relief without impacting fiscal deficit. We cannot do it at the cost of fiscal position and give it when it can absorb it," he said.