Oil Stocks Outlook for the week – 29.06.2015 to 03.07.2015
PSU
oil retailers seen in range; Cairn weak
( www.rupeedesk.in )
Stocks
of state-owned oil marketing companies are seen moving in a narrow range next
week in the absence of any major triggers. The trend will be dictated primarily
by news flow and global crude oil prices. There could be some sentimental
impact of the petrol and diesel price revision due on Tuesday. However, it is
unlikely to be significant as it is now seen as a routine affair. The three PSU
refiners Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum
Corp Ltd revise retail prices of petrol and diesel once a fortnight. If these
companies do go ahead and effect a hike or a cut, their scrips are likely to
move accordingly. Low crude oil prices and robust demand resulting in strong
refining margins may keep also help stocks of the three companies’ upbeat in
the near term.
Through
the week, the three stocks will take cues from the broad market and movement in
crude oil prices and the dollar-rupee exchange rates. The broad market will
take cues from the ongoing talks between Greece and its creditors. Any
possibility of a default by the European nation might trigger a financial
crisis in the euro zone that will adversely impact global markets. Taking cue
from the broad market, major oil stocks are also likely to perform in a subdued
range; softening global crude prices due to oversupply might provide some
cushion to downstream companies, while putting pressure on upstream players
like Oil and Natural Gas Corp Ltd and Cairn India Ltd. The Indian basket of
crude has been relatively stable between $60 and $65 per barrel for the past
few weeks and only a sharp change in the prices would affect share movements.
The
investor community will also watch out for outcome on Iran's talks with the
West on nuclear weapons and a positive outcome on the same could lead to
lifting of sanctions on the West Asian nation.
Back
home, market participants will take cues from development of the monsoon in the
short term and wait for the Parliament session for long-term direction. The
Monsoon session of the Parliament starts on July 21. Cairn India Ltd's counter,
however, is likely to trade with a negative bias as it may continue to be
weighed 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.
