www.rupeedesk.in
Stocks of the state-owned oil marketing companies are likely to remain under pressure next week though they may open slightly positive on Monday after the hike in diesel and petrol price announced yesterday. With the weakness in the broader market expected to continue in the run up to the Union Budget to be announced on Feb 28 and crude price remaining firm, traders see little upside from current levels in the stocks of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd. However, on Monday, these stocks may open higher due to a sentimental boost on the nearly 1.5 rupees per litre hike in petrol price and 0.45 rupees per litre hike in diesel price, announced post market hours yesterday. The outlook for the sector is weak in the near term and BPCL may test the 340-rupee level.
BPCL has been the most preferred one among the state-owned refiners because of its good upstream portfolio. Usually, the decline in stocks of the other two companies is sharply higher than those of BPCL. BPCL presents one of the safest options among OMCs (oil marketing companies) to participate in the theme with upstream levers. Apart from the general weakness in market, the depreciation of the rupee against the dollar may also weigh on these stocks. The Indian currency has depreciated nearly 1.3% against the greenback since last Friday. Stocks of Reliance Industries are also expected to see some more correction next week because of weakening global refining outlook. We believe that refining margins may have peaked out and are likely to remain in a range for the next few quarters.
