NEW DELHI: Shares of oil marketing companies Friday tumbled as much as 29 per cent in morning trade on stock exchanges after the government announced fuel price cut.
The government Thursday announced a Rs 2.50 per litre cut in petrol and diesel prices after it reduced excise duty by Rs 1.50 a litre and asked oil companies to absorb another Re 1.
Following the announcement, shares of oil marketing companies (OMCs) lost significant ground.
Brokers said the downtrend was a knee-jerk reaction.
Market experts said the fuel price cut would have negative implications for upstream public sector companies.
Shares of Indian Oil Corporation opened weak at Rs 126.80, then fell further to its 52-week low of Rs 105.65, down 24.99 per cent over its previous closing price on the BSE.
Similar movement was seen on the Bharat Petroleum counter as well where the stock dipped to its 52-week low of Rs 239, down 28.94 per cent on the BSE.
Hindustan Petroleum also fell to its 52-week low of Rs 165.45, down 25 per cent over its last closing price.
On NSE, too, all the three oil marketing companies fell to their 52-week low level.
"The government's decision to curtail marketing margins on auto fuels by Rs1/litre brings to fore the earnings uncertainty for oil PSUs, associated with an environment of higher crude prices amid the government's socio-economic compulsions," Kotak Institutional Equities said in a research note.