Fuel price hike good but not a game changer: Geosphere Cap

Arvind Sanger of Geosphere Capital feels the recent price hike in diesel and other petroleum products is a positive move. The government, late Friday, raised diesel and cooking-fuel prices, removed the import tax on crude oil and reduced the import tax on all fuel products.

Sanger expects periodic hikes in fuel prices going forward. "With the inflation around,  I am not too optimistic that they [goverment] will do anything meaningfully different than just inch up prices periodically," he says.
Experts believe the positive effects of falling crude prices could be offset by the latest round of local fuel-price increases. "I expect Brent to trade above USD 120 a barrel by the year-end," Sanger says.
Cash-starved oil companies, especially the PSUs, have been rallying after the hikes and news of a possible clarity of subsidy sharing formula.
However, Sanger is not gung-ho on Indian oil companies yet. "Most of the oil companies in India will still have to worry about how slow the government will be in doing further price hikes," he feels.
Sanger says the Indian markets may rally in second half of the year if inflation starts to subside. "The current monsoon season is going to be an important cue for India," he says. Below is a verbatim transcript of the interview. Also watch the video. Q: What did you make of the fuel price hikes on Friday after such a long time? Does it tell you that the government has started to move on policy finally?
A: I would not take this as a sign of anything more than the fact that the government was overdue in doing something to handle the significant deficit that is being built up because of the subsidy burden. As we saw with petrol, the prices were "decontrolled" several months ago and then prices at the pump did not move up till after the state elections.
So maybe they may announce some decontrol but I am not sure what the Indian government