Government cut excise duty on petrol and diesel by Rs 8 and Rs 6 per litre and levied export duty on 11 iron and steel intermediates to lower domestic prices.
It was a brisk session for auto stocks on May 23, especially after the sentiment boost over the weekend. Most of the key listed OEMs stocks are up with smart gains as a result of the central government’s decision to cut the excise duty on petrol by Rs 8 per litre and on diesel by Rs 6 per litre bringing in significant reduction in fuel prices. Several states too slashed the VAT rate soon after, adding to the positive sentiment.
Kerala cut taxes on petrol by Rs 2.41 and diesel Rs 1.36 per litre while the Maharashtra state government reduced VAT on petVrol by Rs 2.08 and diesel by Rs 1.44 per litre. Rajasthan too cut down VAT on petrol by Rs 2.48 per litre and diesel by Rs 1.16 per litre. Odisha brought down VAT on petrol by Rs 2.23 and diesel by Rs 1.36 a litre.
That apart the Finance Ministry has levied export duty on 11 iron and steel intermediates. It has additionally cut import duty on three key raw materials for steel production and three inputs for making plastic items. The move is seen as a measure to lower the cost for local industry. The Centre also raised the duty on iron ore exports to 50 percent and duty on a few steel intermediaries by 15 percent. Industry experts believe this could help in increasing the domestic availability.
The fact that metal prices are cooling off significantly in the international market has added to the positive sentiment. Steel and Aluminium prices are down significantly, around 15-20 percent from their March highs.
However, the cut in VAT may not augur well for the Oil Marketing companies and the move may hurt their margins along with inventory losses for the first quarter FY23.
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