Share prices of upstream companies, led by ONGC, took a hit on the BSE today after the government increased the burden of fuel subsidy payable by the oil firms from one-third to 38.8 pr cent for 2010-11 fiscal.
Shares of the Oil and Natural Gas Corp (ONGC) slipped by 1.17% to settle at Rs 274.05 on the BSE on fears that the move may spook its public offer. In intra-day, the scrip shed 3.53% to touch a month's low of Rs 267.50.
The company also slipped to third spot in terms of market capitalisation behind Reliance Industries and Coal India.
Oil India and GAIL too ended the day with losses, while the former lost 0.86% to close at Rs 1,313.45, the latter shed 0.34% to end at Rs 426.60 on the BSE.
"The announcement of the oil subsidy burden for upstream companies marred the mood of the investors which in-turn saw these stocks ending the day on weaker note," IIFL head of research (India Private Clients) Amar Ambani said.
Of the Rs 78,159-crore revenue that retailers lost on selling diesel, LPG and kerosene at government controlled rates in 2010-11, upstream firms - ONGC, Oil India and GAIL- have been ordered to contribute Rs 30,296.75 crore (38.8%).
ONGC has been ordered to chip in with Rs 24,892.4 crore, OIL Rs 3,293 crore and GAIL Rs 2,111.24 crore.
Retailers IOC, BPCL and HPCL ended the day on positive note. HPCL ended higher by 1.18% at Rs 360.90, while BPCL closed at Rs 625.95, up 1.43% and IOC rose by 0.46% to Rs 318.95.
Traditionally, upstream companies made up roughly one-third (33.33%) of the revenues lost on fuel sales through discounts on crude oil and products they sold to Indian Oil, Hindustan Petroleum and Bharat Petroleum.