Oil Stocks
Outlook for the week – 08 to 12.09.2014
( www.rupeedesk.in )
Stocks of state-owned companies
are seen range bound next week amid lack of triggers
but the movement in prices of
crude oil and rupee-dollar rate will be the key factor.
Shares of all three
refiners--Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and
Hindustan Petroleum Corp
Ltd--have rallied significantly in the last few weeks on hopes
of improvement in fundamentals as
diesel prices inched closer to market parity.
After the 50-paise hike in diesel
prices on Sunday, the revenue loss on the fuel has
declined to just 8 paise a litre.
Most market participants now expect the government to
deregulate the fuel.
Investors may be wary of making
further positive bets on the three unless crude prices
fall sharply from current levels
or the rupee strengthens. Over the last few days, the
Indian currency has been
oscillating between 61 and 60 for a dollar. The rupee is
expected to gain some strength in
the near term as dollar flows to India may increase due
to monetary policy stimulus
announced this week by the European Central Bank.
This could support the Indian
currency in the coming days, said Suresh Nair, director at
Admisi Forex India Pvt Ltd.
Meanwhile, crude prices continue to remain low at around
$100 a barrel for the Indian
basket. Because of the strong support of low crude prices and
strength in the rupee, there is
little downside in the three stocks. However, further upside
will depend on the announcement
of deregulation.
The ongoing reforms in oil market
and the efforts to reduce the subsidy burden of Oil and
Natural Gas Corp Ltd and Oil
India Ltd may also keep the shares of these companies in a range with positive bias.
