www.rupeedesk.in
Shares of the state-owned oil marketing companies--Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp--are seen rangebound next week while those of Reliance Industries may witness some buying activity. Continuous softening of crude oil prices provides much-needed relief to oil marketing companies, but traders are concerned that the reversal in the rupee-dollar trend may take away most of that benefit. India's crude oil basket cost $105.06 a barrel on Thursday, over $2 cheaper than a week ago and even lower than the average $109.5 a barrel in Jan-Mar. Meanwhile, the rupee, which was stable around 54.00 a dollar until last week, has started depreciating, ending at 54.80 for a dollar . A decline in rupee makes the crude costlier for refiners who have to import 80% of their crude requirements.On the other hand, sentiment is positive for these stocks as well as those of public sector upstream companies like Oil and Natural Gas Corp, Oil India, and GAIL (India), as revenue losses incurred on subsidised sale of fuel by the marketing companies are expected to decline sharply in 2013 14 (Apr-Mar). According to industry estimates, the oil marketing companies' revenue loss on sale of subsidised fuels is estimated to fall by a third in the current financial year to 1.08 trln rupees due to measures like capping the number of subsidised cooking gas cylinders and allowing companies to raise retail diesel prices by 40-50 paise per ltr every month. After having fallen over 8% in less than a month, shares of Reliance Industries are expected to recover next week, as traders may cover short positions ahead of Jan-Mar earnings, to be detailed later this month. The company is expected to report significantly better earnings owing to the industry-wide improvement in refining and petrochemicals margins.
