MUMBAI: Stock and equity market players and economists were surprised by the decision of government-run oil marketing companies (OMCs) to raise price of petrol by Rs 5 per litre, since they expected the prices of diesel, cooking gas and kerosene to go up as well.
Dealers and analysts agree that hike in the prices of petro products was on the cards, but none expected this to come only for petrol. Now they feel since technically only petrol prices have been 'de-controlled', meaning OMCs can hike its price without consulting the government, and not of diesel, LPG and kerosene, the ministry will raise prices of the other products once global crude prices stabilize.
"Of late, global crude prices have turned volatile. Probably this has put the government on a wait-and-watch mode and defer a decision on the hike in prices of other products," said Siddhartha Sanyal, Chief India Economist, Barclays Capital.
Economists feel since a hike in petrol prices will have a minimal impact on the rate of inflation, this has been hiked. "The direct impact of the hike could be 10-15 basis points (100 basis points = 1%) for a Rs 5 rise, while the indirect impact is much less," Sanyal added.
On the other hand, any hike in the price of diesel has substantially higher indirect impact, including on the prices of food items. "With the food price inflation showing some signs of moderating, probably the government does not want to disturb it," said a bond market dealer. Although brokers and dealers expect the stocks of OMCs to gain when markets open on Monday, but hiking the price of only one product is seen as 'lopsided'.
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