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Stocks of the three oil marketing companies Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd are seen steady with a negative bias next week and will take cues from crude prices and rupee-dollar movement.
BPCL may buck the trend, as there is high probability that a deal for 20% stake in the Rovuma basin block in Mozambique may get finalised soon. BPCL has 10% stake in the block, and Videocon Industries and Anadarko have put up their respective 10% stakes for sale. Oil and Natural Gas Corp Ltd and Oil India Ltd are reported to have put in a $5-bln bid for the 20% stake.
The final outcome of the stake sale in Mozambique block could lead to a revaluation of BPCL's holding in it and subsequently its own share price. If ONGC and Oil India manage to buy the stake, the companies' shares too could see an impact, depending on the valuation they pay for it. On the other hand, crude oil prices recovered slightly this week while at the same time, the rupee lost ground to the dollar. Both trends are negative for oil refiners who need to import over 75% of their crude oil requirements.
The Indian basket of crude rose by over $2 a barrel this week to cross the $100-per-barrel mark again. Meanwhile, the rupee ended at 54.37 a dollar as compared with 53.96 a dollar last Thursday.
We expect further increase in crude prices or weakening of the rupee could lead to a decline in shares of the oil marketing companies. The shares of these companies had gained 7-10% this month because of decline in crude prices and strengthening of the rupee.
