BPCL, IOC stocks fall as spike in crude prices offsets diesel hike

Shares in Indian oil marketing companies and refiners erased earlier sharp gains and turned negative as the spike in crude prices post-QE3 is offsetting the positive impact of the government's diesel price hike.

Hindustan Petroleum Corp fell 2.6 percent as of 0808 GMT after earlier rising as much as 5.5 percent.

Indian Oil Corp fell 1.3 percent after rising up to 5.3 percent, while Bharat Petroleum Corp fell 1.7 percent after rising as much as 6.2 percent.

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Brent crude has risen more than $1 a barrel towards $117 after the Federal Reserve announced a new asset-purchase programme on Thursday.

Goldman Sachs said that the diesel hike in India would be positive for marketing and refining companies, but it could also lead to a lower subsidy payout from the government as well as oil explorers.

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Fuel subsidies in India are borne by the government, marketing and refining companies, as well as explorers.

"While the price hike is positive for oil companies, the government will be biggest beneficiary, in our view," Goldman said in a note.

Reuters