Sensex Falls As Oil Companies Slip; Vedanta Hits Over 10-Month Low
Retail fuel prices have surged on the back of a rally in crude oil, now hovering around $80 per barrel amid production cuts led by the Organization of the Petroleum Exporting Countries (OPEC)
Photo Credit : Umesh Goswami
Indian shares fell on Wednesday pulled down by oil companies, while mining and energy conglomerate Vedanta Ltd hit an over 10-month low as protests against its copper plant in south India turned violent.
State-owned oil refiners as well as marketing companies, such as Indian Oil and Hindustan Petroleum, took a hit on worries that the government may ask them to share the burden of higher petrol and diesel prices.
Retail fuel prices have surged on the back of a rally in crude oil, now hovering around $80 per barrel amid production cuts led by the Organization of the Petroleum Exporting Countries (OPEC).
"Oil companies are down on concerns that in the next 2-3 days there will be some kind of resolution as government officials are taking stock of the situation on how to encounter rising petrol and diesel prices," said Saurabh Jain, AVP - Research at SMC Global Securities.
"I think market is anticipating that government may work out the historical formula wherein the burden is shared by all three - downstream, upstream companies and the government - which would be a whammy on the profitability for the these firms," he said.
The broader NSE Nifty dropped 0.3 percent to 10,505.15 as of 0623 GMT, while the benchmark BSE Sensex slipped 0.14 percent to 34,602.09.
Indian Oil fell 4.2 percent and HPCL dropped 6.2 percent, while refiner Oil and Natural Gas Corp Ltd was trading 2.8 percent lower.
Vedanta Ltd hit its lowest since July 2017 after nine people were killed when police fired at violent protesters calling for the closure of a copper smelter run by parent Vedanta Resources Plc.
Meanwhile, investors cheered earnings from Cipla Ltd and the stock gained as much as 7.8 percent, its biggest percentage gain in over three months after the drugmaker posted a fourth-quarter profit against a loss last year.
State Bank of India rose as much as 5 percent to a near three-month high and was the top gainer on the NSE index after the state-owned lender said it sees recovery over next two years despite posting a $1.1 billion rupee fourth-quarter loss.