Shares of oil and gas stocks declined 0.36% to 3.38% at 11:45 IST on BSE amid a broad-based market fall.
The S&P BSE Oil & Gas index fell 1.33% to 9,115.67. Meanwhile, the S&P BSE Sensex was down 383.84 points or 1.39% at 27,223.98
Shares of public sector oil marketing companies (PSU OMCs) edged lower. BPCL (down 1.55%), HPCL (down 0.46%) and Indian Oil Corporation (down 0.77%) edged lower.
Shares of upstream oil exploration & production (E&P) firms dropped along with decline in crude oil prices. Reliance Industries (down 1.72%), Cairn India (down 1.02%), Oil India (down 1%) and ONGC (down 0.36%) edged lower. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms.
Shares of state-run gas transmission and distribution firm GAIL (India) were off 3.38%. GAIL (India) bears a part of the subsidy burden of PSU OMCs on sale of LPG.
In the global commodities markets, Brent crude oil futures edged lower. Brent for October settlement was currently off 61 cents at $46.01 a barrel. The contract had declined 54 cents or 1.14% to settle at $46.62 a barrel during the previous trading session.
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India imports about 80% of its crude requirements and a decline in crude prices eases concerns on fiscal deficit, inflation and gives more room for the government to boost growth through spending on infrastructure. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. A weak rupee raises the cost of imports. State-run oil marketing companies have been cutting petrol and diesel prices on the back of falling international prices. Lower diesel prices will reduce transportation costs which in turn will reduce fuel price inflation. Diesel is a key transportation fuel.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was currently hovering at 65.8425, compared with close of 65.55 during the previous trading session.
The S&P BSE Oil & Gas index had underperformed the market over the past one month till 20 August 2015, falling 8.84% compared with 2.86% fall in the Sensex. The index also underperformed the market in past one quarter, falling 2.58% as against Sensex's 0.82% decline.
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