OMCs rise on falling crude, Cairn falls 5%

State-run oil companies rallied in a weak market Monday on the back of falling crude prices. Oil dived below $97 a barrel in Asia, bringing its fall over three trading days to about 8 per cent, as a slowdown in U.S. hiring and election results in Europe dimmed expectations of stronger economic growth.

At 12.55 pm, BPCL gained 3.3 per cent, HPCL  rose 1.2 per cent, and Indian Oil Corp advanced 1.7 per cent, well outperforming the Sensex, which was down 1.4 percent.

Vedanta Group company Cairn India, which gains on strong crude, fell over 5 per cent and languished at the bottom of the Nifty index.

Hopes for a hike in the prices of diesel also boosted stocks.
"OMCs are awaiting diesel and kerosene price hike, which is quite imminent at this point," said Ashutosh Bhardwaj, senior analyst at Nirmal Bang's institutional equities division, referring to oil marketing companies.

Bhardwaj expects a hike of Rs 3-5 in diesel prices after the parliamentary session which ends on May 21.

Brent crude for June delivery was down $1.81 at $111.37 per barrel in London. Crude has slumped about 8 percent over the last three trading sessions amid signs oil demand may be weaker than previously expected.

The Energy Department said last week that U.S. crude inventories have risen to the highest since 1990. That was followed by the Labor Department on Friday announcing the economy added 115,000 jobs in April, far fewer than the 165,000 analysts were expecting.

Investors are also concerned political upheaval in Europe could derail government austerity measures and worsen the region's debt problems.

Oil traders often look to global equities as a measure of overall investor sentiment, and stock markets in Asia were down sharply Monday.

(With inputs from Reuters and AP)