NEW DELHI: Shares of oil marketing companies rallied up to 4 per cent in early trade on Wednesday following a sharp fall in crude oil prices in the international markets.
Hindustan Petroleum Corporation (HPCL) was trading 4.12 per cent up at Rs 226.05 at around 9.17 am (IST), while Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) were up 3.65 per cent and 2.47 per cent, respectively.On the other hand, the benchmark BSE Sensex was trading 336 points, or 1 per cent, up at 34,183 at around the same time.Oil prices on Wednesday extended fall from the previous day, when crude slumped as much as 5 per cent, after Saudi Arabia said it would make up for supply disruptions from US sanctions targeting Iran's petroleum exports from next month.Brent crude oil prices slipped to $76.22 per barrel on Tuesday from $76.83 per barrel on Monday.Earlier this week, Nomura downgraded oil marketing companies (OMCs) to 'neutral' from 'buy'.Governments decision to ask OMCs to absorb Rs 1 per litre on petrol/diesel is a big dent to the confidence on marketing reforms; with elections in 2019 and weak macros, investor confidence may not recover any time soon, according to Nomura.We believe OMCs are making losses on petrol currently that will unlikely be made good, as officially the fuel prices remain deregulated, said Nomura.