BEML, IREDA, BPCL and REC shares were among gainers on Tuesday as majority of stocks were trading positive in a relief rally. Indian markets witnessed strong selling recently and a pullback was expected. The markets could see high volatility in the upcoming sessions but today seems like the day for relief rally for investors facing massive losses in their portfolios valuations. BEML stock was trading 3.37 percent higher while IREDA, REC and BPCL were trading with gains above 3 percent.

IREDA will soon announce quarterly results and the stock could see higher volumes in the upcoming sessions.

OIL PSUs in Focus as Petrol, Diesel Excise Duty Raised by Rs 2/Litre

In a move aimed at augmenting government revenue, the Centre has increased the excise duty on petrol and diesel by Rs 2 per litre, though officials say the revision will not affect retail prices for consumers at the pump—at least for now.

The announcement arrives at a delicate juncture. While global crude oil prices have recently trended lower, driven largely by escalating fears of a global trade conflict spurred by retaliatory tariffs from the United States, the timing of the duty hike has raised eyebrows among economists and industry analysts.

Global Oil Prices Fall, Domestic Duties Rise

The government’s decision to raise fuel duties comes paradoxically amid a softening of international crude oil benchmarks. Concerns of a looming global trade war, amplified by the U.S. administration’s recent tariff escalation, have prompted a slowdown in oil demand forecasts, weighing on prices. This backdrop makes the domestic tax hike particularly contentious.

Inflation Concerns Loom Large

While the government has assured that there will be no immediate pass-through of the excise hike to consumers, experts caution that the ripple effect may eventually be felt. Rising fuel duties often result in increased transportation and logistics costs, which in turn can inflate prices of essential goods and services. Households already grappling with inflationary pressure may see further strain if oil marketing companies pass on the cost in coming weeks.

Revenue Augmentation Amid Economic Headwinds

The Centre’s move is widely viewed as an attempt to shore up fiscal revenues in a year marked by external economic volatility and subdued tax collections. Fuel duties remain a critical revenue stream for both central and state governments, and the Rs 2 hike is likely to generate significant inflows.

However, critics argue the timing is questionable. "At a time when global oil prices are easing, this increase sends mixed signals to the market and consumers," said an economist at a leading research firm, adding that it could mute any benefits from falling international crude rates.

Policy Reversal After Windfall Tax Relief

The increase in excise duties also comes just months after the government scrapped the windfall tax on domestically-produced crude oil and fuel exports in December 2024. That decision was taken in response to declining international oil prices, which had eroded producers' profit margins.

Now, with crude prices still trending downward, the reintroduction of a higher tax burden—albeit on consumers this time—highlights the government’s evolving fiscal strategy amid persistent macroeconomic uncertainties.

Markets May Have Already Absorbed Trump Tariff Shock, Says White Oak’s Khemka

Despite heightened volatility stemming from former U.S. President Donald Trump’s tariff threats and their potential implications for global trade, Prashant Khemka, founder of White Oak Capital, believes the market may have already priced in much of the downside.

Investor Sentiment May Have Hit a Bottom

“We might already be witnessing what could be the ‘Trump bottom’ for markets,” Khemka said in a recent commentary, referring to the point at which investor pessimism may have peaked. According to him, the key question is no longer the severity of the negative news, but rather whether future developments will be better or worse than current expectations.

“Markets are forward-looking,” Khemka emphasized. “After such a swift correction in sentiment, subsequent negative headlines could be perceived as less damaging—or even come across as moderately encouraging.”

Markets React Before Data Catches Up

Drawing parallels to the COVID-era selloff and rebound, Khemka recalled how equities bottomed out in March 2020 even though economic indicators remained deeply negative. “Markets turned around on March 23rd, long before earnings visibility or fiscal clarity emerged,” he said. “Investors shouldn’t wait for all the numbers to look rosy. Markets anticipate and move ahead of real-world data.”

That same pattern of anticipatory behavior may be playing out now, he added, as investors brace for policy shifts and diplomatic recalibrations in response to Trump’s protectionist stance.

Even a Partial Rollback Could Spark Rally

Khemka suggested that even a marginal softening in trade policy rhetoric could drive a significant relief rally in equities. “Imagine a scenario where Trump announces a reduction in tariffs—from 30% to 15% on select goods,” he posited. “That single headline could unleash a powerful rally across global markets.”

While real-world impacts of protectionist policies could persist, financial markets are likely to respond more swiftly to shifts in tone than to fundamental economic changes, he explained.

Markets Trade on Narrative as Much as Data

Khemka reiterated that markets are narrative-driven and often trade on relative perception. “Even if the macro backdrop remains tough, it's the direction of change that matters,” he said. “If sentiment improves at the margin, equity markets will reflect that optimism quickly—even if real economic recovery is still a ways off.”

In short, while concerns about protectionism remain valid, investors may find opportunities in market dislocations—particularly if policy signals begin to suggest moderation rather than escalation.