www.rupeedesk.in
After the drubbing oil companies' stocks took this week, we see some recovery next week
especially in the stocks of state-owned oil marketing companies and Reliance Industries
Ltd. Indian Oil Corp Ltd announced 45 paisa per litre increase in the price of diesel post
market hours yesterday. Usually the other two companies Bharat Petroleum Corp Ltd and
Hindustan Petroleum Corp Ltd follow IOC's diesel price hike move. We expect the
stocks of these three companies to open positive on Monday due to diesel price hike.
Also, the broad market is seen volatile with an upward bias next week ahead of the expiry
of March futures on Thursday.
The positive trend in the broad market also is expected to further lift the stocks of the oil
marketing companies. The oil companies have so far increased diesel prices thrice by
around 50 paisa per litre each after the government allowed them to make minor changes
in the retail price of the fuel. Besides, the rupee continues to remain stable just above the
54 rupees per dollar level while crude prices have been consistently declining. This trend
is seen as a positive for the oil companies in the long term, as it will help them reduce the
revenue losses on subsidised fuels. Continued decline in crude oil prices also may give a
leg up to the three stocks.
Stocks of Reliance Industries ended at its lowest level in three weeks yesterday but they
are seen recovering on value buying as we see not much deterioration in the environment for the company. However, the company's gross refining margins have softened a bit over
the last two weeks, after touching a high of around $11 a barrel in February. Further
softening in the refining margins may cap the gains in Reliance Industries' stock. A
positive broader market may further push up the stock.
