Shares of oil marketing companies and paint manufacturers declined up to 3% in early trade on Friday after petrol and diesel prices were increased by ₹3 per litre across the country. According to reports from The Hindu BusinessLine and Outlook Business, the fuel price hike, the first in more than four years, came amid mounting losses suffered by fuel retailers due to elevated global crude oil prices. Economists now warn that the ₹3 per litre hike will lift India's retail inflation by 15 basis points in the short term, with cumulative increases potentially pushing FY27 CPI to 5%. As per Care Edge Chief Economist Rajani Sinha, the direct impact is 15 bps from fuel with indirect pressures through transportation, freight, logistics, and agriculture adding another 10-15 bps. IDFC First Bank assessed the direct impact at 12 basis points, potentially rising to 15-16 bps with minimal indirect effects.
On the BSE, shares of Bharat Petroleum Corporation Ltd declined 2.71%, Hindustan Petroleum Corporation Ltd dipped 2.39%, and Indian Oil Corporation fell 1.85%. As reported by The Hindu BusinessLine and Outlook Business, paint manufacturers also traded lower, with Indigo Paints declining 1.36%, Asian Paints slipping 0.42%, and Berger Paints India falling 0.14%. According to ETMarkets, despite the price hike, shares of HPCL and BPCL tumbled 3% as investors realised the adjustment won't be enough to handle the ocean of mounting losses. Recent market analysis suggests the hike was lower than market expectations, contributing to investor caution despite the price increase.
The fuel price hike represents just one component of a broader inflationary pressure wave affecting Indian consumers. As reported by The Hindu BusinessLine and Outlook Business, the dual increase in fuel prices comes on the heels of a massive ₹993 spike in commercial LPG cylinders, creating a cascading effect across major cities. This comprehensive price surge threatens to strain household budgets just days after PM Narendra Modi delivered his strategic "Spend Wise" mantra, urging national fuel conservation amid the volatile West Asia crisis. While political leaders downsize personal convoys to lead by example, ordinary citizens face an immediate, punishing strain on daily household budgets.
Brent crude, the global oil benchmark, rose 1.23% to $107.02 per barrel. According to Ajit Mishra – SVP, Research, Religare Broking Ltd, as reported by The Hindu BusinessLine and Outlook Business, the sharp increase in petrol, diesel, and CNG prices reflects the direct impact of the escalating West Asia energy crisis and supply disruptions around the Strait of Hormuz. Energy prices globally shot up after the US-Israel attack on Iran on February 28, and the subsequent retaliation by Tehran effectively shut down the Strait of Hormuz - the sea lane through which a fifth of the world's oil and gas transits. With global crude oil prices surging from nearly $69 in February to above $120 per barrel and currently at the $107 mark, oil marketing companies were under mounting pressure due to rising input costs and shrinking marketing margins.
Earlier this week, Oil Minister Hardeep Singh Puri said the three fuel retailers were losing about ₹1,000 crore per day, and the cumulative losses in a quarter were enough to wipe away all the profit they made in a full year. As reported by The Hindu BusinessLine and Outlook Business, he had put the losses at about ₹1 lakh crore. To cushion consumers from rising global prices, the government, on March 27, reduced excise duty on petrol and diesel by ₹10 per litre each. Industry sources said the price hike appears calibrated - enough to partially ease margin pressure on oil companies without creating major inflationary shock. The increase, however, will have some impact on inflation, they said. Economists note that another ₹5-10/litre hike over coming months is 'quite likely,' potentially adding 90–100 bps in a broader scenario involving LPG adjustments and pushing inflation toward 5-5.5%.
