HPCL, BPCL, IOC shares rise up to 4% as govt cuts excise duty on petrol and diesel; what lies ahead?

The shares of oil marketing companies including Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil (IOC) jumped up to 4% on Friday after the Indian government slashed the special additional excise duty on petrol to Rs 3 per litre and scrapped it on diesel, according to a government order dated Thursday.

The development comes amid heightened volatility in domestic fuel prices, as the war in the Middle East triggered a skyrocketing rally in global crude oil prices, keeping them above the key $100 per barrel-level.

The government’s move comes a day after India's largest private fuel retailer Nayara Energy raised petrol prices by Rs 5 per litre and diesel by Rs 3 per litre. Nayara Energy, which is majorily-owned by Russia's Rosneft, operates over 7,000 fuel stations across India. Dealers expressed concern over the price hike, warning of potential demand impact and signalling possible protests. Some dealers also indicated that fuel supplies had been curtailed in recent days.


Meanwhile, the rally in oil prices cooled down slightly early on Friday, which is also expected to be a positive tailwind for the battered OMC stocks. Brent crude futures declined over 1% to $106.7 per barrel. WTI Crude futures also fell over 1% to $93 per barrel.

What impact oil's rally will have on OMC stocks

The OMC stocks had seen sharp decline earlier as brokerages expected margin pressures due to the rising crude oil prices and slashed their target prices. Ambit Institutional Equities recently issued ‘Sell’ ratings for the shares of oil marketing companies like HPCL, BPCL and IOC, and cut their target prices by 45% to 57%.

The brokerage said $80 per barrel is the new normal for Brent, as infrastructure damage, geopolitical risk premiums and inventory restocking would likely keep oil prices elevated even after the Middle East conflict cools down.

Ambit said that the political reality following the 2024 Lok Sabha elections and fiscal pressures from the rupee’s sharp depreciation will likely prevent the government from being generous with its relief for the state-run OMCs. This comes after the brokerage held bullish calls for the stocks earlier, following their stellar share price performance between June 2022 and February 2026. “We believe that, in FY26 to FY28, the opposite would happen. Hence, we would see any knee-jerk correction in Brent crude or government action of Rs 1 to Rs 2/litre increase in RSP as triggers to exit OMCs,” it explained.

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