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Stocks of state-owned oil marketing companies are seen rangebound initially next week and may take cues from the Union Budget in the latter half especially on announcements related to subsidies and excise duty on oil products. The Union Budget will be presented on Feb 28. Oil companies have been seeking inclusion of petrol, diesel and aviation turbine fuel under Goods and Service Tax, which will help reduce the tax incidence on these products. Also, clarity on fuel subsidy compensation ahead of a financial year will help ease the high interest burden that Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd have to bear because of delayed payment by government. If announced, these measures are construed as positive for oil marketing companies and may help their shares gain in the last two trading days of the week. Stability in the pricing mechanism and clarity on how the companies will be compensated towards the under-recovery and subsidy sharing is needed, R.S. Butola, chairman and managing director of Indian Oil Corp, had said. Oil-marketing companies are bearing huge interest costs but the business profile of oil companies does not permit them to incur such huge interest costs, he added. Movement in crude oil prices and rupee-dollar trends will also determine the movement in shares of oil marketing companies. While crude oil prices have reversed the trend and started softening, the rupee continues to remain weak.
Stocks of state-owned oil marketing companies are seen rangebound initially next week and may take cues from the Union Budget in the latter half especially on announcements related to subsidies and excise duty on oil products. The Union Budget will be presented on Feb 28. Oil companies have been seeking inclusion of petrol, diesel and aviation turbine fuel under Goods and Service Tax, which will help reduce the tax incidence on these products. Also, clarity on fuel subsidy compensation ahead of a financial year will help ease the high interest burden that Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd have to bear because of delayed payment by government. If announced, these measures are construed as positive for oil marketing companies and may help their shares gain in the last two trading days of the week. Stability in the pricing mechanism and clarity on how the companies will be compensated towards the under-recovery and subsidy sharing is needed, R.S. Butola, chairman and managing director of Indian Oil Corp, had said. Oil-marketing companies are bearing huge interest costs but the business profile of oil companies does not permit them to incur such huge interest costs, he added. Movement in crude oil prices and rupee-dollar trends will also determine the movement in shares of oil marketing companies. While crude oil prices have reversed the trend and started softening, the rupee continues to remain weak.
