The central government has reduced excise duty on petrol and diesel by 10 rupees per litre. This decision will provide some relief to the country's oil marketing companies amid rising crude oil prices internationally. Following this announcement, the stock prices of state-owned companies like Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Limited (BPCL) were rising. However, this increase did not sustain amid the overall decline in the stock market. As the day progressed, these stocks fell again.

Also Read | Markets fall sharply: Sensex down 1,100 points, here’s what’s behind it

On Friday morning, BPCL's stock rose 4 percent to reach 298 rupees. HPCL's stock also increased 4 percent to 358 rupees. IOCL's stock rose 2 percent to 144 rupees. However, at the time of writing this report, all these stocks are down by more than 1 percent.

Rising crude prices and global tensions continue to pressure oil companies

Harshal Dasani, Business Head at INV Assets, has explained the reason for this trend. He stated that the reduction in excise duty initially created a positive atmosphere. This is because the reduction in duty would significantly ease pressure on oil marketing companies. However, this expert believes that this duty reduction is not sufficient to handle the massive price increase internationally.

On this matter, he said that oil prices in the international market have increased by nearly 50 percent since the US and Israel began attacks on Iran. The closure of the Strait of Hormuz has also created supply shortages in the market. In this situation, the country's oil marketing companies are forced to buy crude oil at much higher prices.

Also Read | Mid-air scare: Air India London flight turns back after 7 hours due to technical snag

But the retail prices of petrol and diesel remain unchanged. This is increasing the burden of losses on oil marketing companies. Although the reduction in duty will help manage part of these losses, most experts believe that the impact on companies' financial reports cannot be completely avoided in the long term. Due to all these factors, despite the initial increase, the share graphs later turned red.

{News Ei Samay does not provide investment advice anywhere. Investment and trading in the share market or any field involve risk. Proper study and expert advice are recommended beforehand. This news is published for educational and awareness purposes.}