www.rupeedesk.in
Stocks of the state-owned oil marketing companies will track the rupee-dollar movement next week as the sharp depreciation of the rupee is bleeding the companies by increasing their revenue loss on sale of subsidised fuels. Within this week, the Indian currency depreciated around 3.5% against the dollar. Since Apr 30, the Indian currency has depreciated around 13%. Every rupee increase in the value of the dollar, increases the price of crude oil for Indian refiners by around $3 a barrel.
The three public sector oil retailers--Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd, and Bharat Petroleum Corp Ltd--are incurring daily revenue losses of 3.79 bln rupees on sale of subsidised fuels, a 6% rise from the previous fortnight. The revenue loss on diesel is at 9.29 rupees per ltr, while that on kerosene sale is estimated around 33.54 rupees an ltr. Crude oil prices too have firmed up over the last few days, putting further pressure on the finances of these companies. The Indian basket of crude cost $106.2 a barrel on Thursday, which is significantly more than the average $102.2 price in July.
The three companies were the worst hit in the current week, falling 13-17% following the rupee crash. We expect the stocks to remain under pressure unless the Indian currency stages a recovery. The outlook on the rupee is bearish in the near term and that will weigh on the shares of the three companies. Stocks of upstream companies Oil and Natural Gas Corp and Oil India Ltd may also remain subdued weighed by the currency as these companies have to bear a large share of the revenue losses incurred by the oil marketing companies.
Stocks of the state-owned oil marketing companies will track the rupee-dollar movement next week as the sharp depreciation of the rupee is bleeding the companies by increasing their revenue loss on sale of subsidised fuels. Within this week, the Indian currency depreciated around 3.5% against the dollar. Since Apr 30, the Indian currency has depreciated around 13%. Every rupee increase in the value of the dollar, increases the price of crude oil for Indian refiners by around $3 a barrel.
The three public sector oil retailers--Indian Oil Corp Ltd, Hindustan Petroleum Corp Ltd, and Bharat Petroleum Corp Ltd--are incurring daily revenue losses of 3.79 bln rupees on sale of subsidised fuels, a 6% rise from the previous fortnight. The revenue loss on diesel is at 9.29 rupees per ltr, while that on kerosene sale is estimated around 33.54 rupees an ltr. Crude oil prices too have firmed up over the last few days, putting further pressure on the finances of these companies. The Indian basket of crude cost $106.2 a barrel on Thursday, which is significantly more than the average $102.2 price in July.
The three companies were the worst hit in the current week, falling 13-17% following the rupee crash. We expect the stocks to remain under pressure unless the Indian currency stages a recovery. The outlook on the rupee is bearish in the near term and that will weigh on the shares of the three companies. Stocks of upstream companies Oil and Natural Gas Corp and Oil India Ltd may also remain subdued weighed by the currency as these companies have to bear a large share of the revenue losses incurred by the oil marketing companies.
