In a recent research note, securities firm Angel Broking said it expects the government to raise diesel prices progressively during the calendar year 2013 and 2014.
This may reduce subsidy burden for state-run oil marketing companies (OMCs) and upstream oil companies, the note said.
The brokerage further said that the recent hike in diesel price was in line with its expectations as government had permitted OMCs to make small price hikes in prices of diesel.
Recently, state-run OMCs raised the petrol and diesel prices by Rs 1.50 per litre and 45 paise respectively. The first hike in petrol price in over three-and-a-half months and the second rise in diesel rates in one month exclude local sales tax or VAT and the increase for consumers at petrol pumps would be higher.
The brokerage said the petrol price hike is not expected to have any impact on under-recoveries.