Today EGoM (Empowered Group of Ministers) headed by Mr. Pranab Minister agreed(Partially) for Kirit Parikh recommendations of oil price deregulations.
Today EGoM decided that, Petrol price will be fully decided by the market forces & other petroleum products like Diesel, Kerosene & LPG prices by partially depending on international oil price movement.
Today during market hours only this news came in & all oil marketing stocks closed very high even though market closed in negative.
According this deregulation,
1. Petrol will cost around Rs 3.5 more
2. Diesel price will be hiked by Rs. 2
3. Kerosene by Rs. 3
4. LPG by Rs. 35
This is one of best move as compared to longer time future of the country's economy, even though in short term it will leads to inflationary pressure as present inflation itself is very high as compared to RBI's comfort level. One more advantage is in shorter term, fiscal deficit of the country will be reduced due to less subsidizers to oil companies.
Now coming to stock market point of view, this move is good for longer term as ratings of the companies & country will be stronger as compared to past & present ones. And as I told earlier, almost all oil marketing companies closed with more 5% jump to their previous closes. But at same time stocks from Auto, Banks, Shipping & etc started falling as in the anticipation of oil price hike leads to
1. Less demand for auto sales
2. RBI's interest rate policy team may increase rates anytime sooner than later
3. Increase in the cost of shipping & transportation & etc.
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