HPCL jumped 4.4% to Rs 343 in afternoon trades, but it had recorded a still higher Rs 346 (up 5.3%) earlier in the day, a 52-week high.

The Rs 346-mark has been its highest level in the past few years as well, in fact. Volumes numbered 16.6 lakh shares on the counter by mid-afternoon trades. Volumes averaged 3.7-5.8 lakh HPCL shares, in contrast, over the last couple of trading sessions. Average daily volumes over the last one year (to 20 June 2003) have been 11.1 lakh shares.

FIIs are believed to be accumulating a host of oil and gas stocks. And HPCL figures among these, dealers say. From a recent low of Rs 271.05 on 25 April 2003, the stock has gained 26.5% to the current Rs 343.

The surge today comes following market talk that the due diligence by bidders for HPCL is likely to commence from August 2003. Similar reports had appeared in the media recently . Developments on the disinvestment front are considered a key trigger for the stock. The company will also be announcing its Q4 and FY 2002-03 results on Friday (27 June 2003).

Analysts expect HPCL to report a 56% fall in net profit to Rs 185 crore on a 38% fall in gross sales to Rs 15,150 crore. For FY 2002-03, net profit is expected to show a 38% growth to Rs 1,100 crore on a 19% growth in gross sales to Rs 54,000 crore.

A host of foreign companies like the US-based ChevronTexaco, Malaysia's Petronas, Anglo-Dutch oil major Shell, British oil major BP and Saudi Aramco have put in initial bids for acquiring government control in HPCL. Domestic oil and gas and petrochemicals major, Reliance Industries, is also reported to have put in a bid and so has Ruia group oil company Essar Oil.

The government currently holds a 51% stake in HPCL and, as per the disinvestment plan, it proposes to divest 34% stake by way of strategic sale (for which a number of foreign and Indian companies have put in bids).

HPCL has about 4,600 retail outlets and a 20% market share in retailing petroleum products. The reason for the aggressive bidding for HPCL is the widespread and strong retail network of the company, that could garner for the winning bidder an immediate wide reach in marketing oil products.

Marketing and refining margins of oil companies have been on the rise ever since the administered price mechanism was decontrolled in the oil sector with effect from 1 April 2002. Oil companies now meet every fortnight to decide on oil prices, based on trends in international oil prices.