An unexpected request by India's Election Commission for the government to defer a rise in gas prices until after a looming general election hit shares in Reliance Industries Ltd and Oil and Natural Gas Corp on Tuesday.
A price increase had been due to come into effect on April 1, just days before India starts voting in an election that starts on April 7 and will end on May 12.
The Election Commission gave no reason for its decision late on Monday.
But India's Supreme Court on Tuesday resumed a hearing on two petitions to strike down the cabinet's June 2013 approval of a doubling in the gas price on grounds that it favoured a corporate house and was against the interests of the nation.
The government told the court on Tuesday that it would comply with the Commission's request.
Arvind Kejriwal, the head of India's new anti-corruption Aam Aadmi Party (AAP), which briefly controlled the state government in New Delhi, last month called for a criminal investigation into government officials and Reliance Industries Chairman Mukesh Ambani over the matter. Kejriwal had also called for the Election Commission to stall the price rise.
Reliance Industries is India's second most valuable company, and Ambani is its richest man.
The cabinet last year approved a near-doubling of gas prices from the current $4.20 per million British thermal units to spur investment in exploration for gas.
Following the Election Commission's action, shares in Reliance fell as much as 3.8 percent to 872.50 rupees, on a day when the Mumbai share markets were trading broadly flat. ONGC was also down 3.8 percent and state-run Oil India Ltd was trading down 2.5 percent.
"It sends a very bad signal to the outside world. In this country, due to elections even the commercial decisions can be postponed," said Deven Choksey, managing director at Mumbai brokerage K.R. Choksey Securities.
Many brokerages had upgraded earnings estimates for Reliance and ONGC after the cabinet approved the price hike last year.
"Thank you Election Commission for saving the people of India from huge price rise that would have happened if gas prices had increased from 1 Apr," Kejriwal tweeted after the commission announced it had called for a delay.
Reliance says Kejriwal's allegation that it created an artificial gas shortage to "blackmail" the government into raising prices is baseless. It has long maintained that geological complexities have pushed production lower and costs up, warranting an increase in prices in order to