Oil Minister Dharmendra Pradhan remained non-committal on cutting taxes (excise) to soften the blow of relentless rise in prices since July 3.
Oil retailers Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation rallied as much as 4-5 percent in morning trade Thursday after the government ruled out its intervention in daily revision in oil prices and cut in excise duty.
Oil Minister Dharmendra Pradhan on Wednesday ruled out government intervention to disrupt the daily revision in petrol and diesel prices despite Rs 7.3 per litre spike in rates since July, saying the reform will continue.
He however remained non-committal on cutting taxes (excise) to soften the blow of relentless rise in prices since July 3, the government need to finance huge infrastructure and social projects has to be balanced with consumer needs.
Terming the criticism of spike in rates as unfair, he said the drop in prices for over a fortnight after the daily price revision was introduced on June 16 has been ignored and only "temporary" phenomenon of rising trend is being highlighted.
Explainer: How Daily Revision Of Petrol, Diesel Prices Works
India relies on imports to meet 80 percent of its needs and so domestic fuel rates have been aligned to movement of equivalent product prices in the international market since April 2002.
Previously the rates were changed every fortnight but since June 16 they are revised daily, Pradhan said, adding that the daily revision immediately passes on the benefit of any reduction in international oil prices to consumers and avoids sharp spikes by spreading them in small doses.
The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting international oil prices. In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre.
The windfall from the excise duty hikes helped the government bridge its budgetary deficit.
Morgan Stanley remained overweight on BPCL with target price of Rs 597 per share, IOC with target of Rs 571 and HPCL with target of Rs 543 as it sees strong upcoming earnings season and even stronger 2018 after no intervention by government.
According to the research house, oil marketing companies are likely to report core profit growth of 20-25 percent on strong refining margins
It expects trend of core profit growth to extends next year as margins inching up
At 09:38 hours IST, the stock price of IOC was quoting at Rs 427.35, up 2.69 percent while HPCL was at Rs 468.45, up 2.43 percent and BPCL was at Rs 517.70, up 3.47 percent on the BSE.(With inputs from PTI)