Oil Stocks Outlook for the week – 22 to 26.06.2015
( www.rupeedesk.in )
Low
crude oil prices and robust demand resulting in strong refining margins may
keep shares of state-owned oil marketing companies --Indian Oil Corp Ltd,
Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd -- upbeat in the
near term. We now recommend investing in public sector downstream companies
since deregulation of diesel prices have lifted their margins significantly.
Reliance
Industries Ltd's counter may also see upward momentum aided by positive
developments with regard to its telecom arm Reliance Jio. These included grant
of provisional approval to the company's proposed multi-system operations and a
clear timeline given by it with respect to launch of its 4G services.
A
choppy market with a positive bias is also likely to have some bearing on oil
stocks. No major triggers that may have a direct impact on oil stocks are
likely next week. Refining and marketing margins have been on an uptrend this
year. Low oil prices have led to sharp upswing in oil products demand led by
growth in US, China, and India.
Refining
being the primary business of RIL, higher margins will result in improved
profits. The buoyant outlook for margins may reflect in its shares. Citi
Research in its report has stated it expects the company's operating profit to
show growth after years of sustained decline, a turnaround of return rations
and reduction in proportion of unproductive capital.
Cairn
India Ltd's counter, however, is likely to trade with a negative bias as it may
continue
to
be weight down by the company's proposed merger with parent Vedanta Ltd. Any
positive
development
on Cairn India's production sharing contract extension request for its flagship Rajasthan
block may help the company's scrip.
