Shares of the state-owned oil retailers may stage some recovery
next week on value buying, though a lot will depend on the rupee-dollar movement and
crude prices. Also, the market will be watching government's stance on hike in diesel
prices by the three state-owned companies--Indian Oil Corp Ltd, Bharat Petroleum Corp
Ltd and Hindustan
Petroleum Corp Ltd.
Some reports earlier this week had quoted Petroleum and Natural
Gas Minister Veerappa Moily as saying that the government is looking at a proposal to
allow these companies raise price of diesel by more than the usual 50 paise a month. However, an oil ministry official told Cogencis later that no such
proposal is under
consideration at the moment. The revenue loss on sales of the
subsidised fuel is mounting due to the weakening of the rupee against the dollar and has
reached 10.22 rupees a ltr now.
The Indian rupee has depreciated over 8% against the US dollar in
the last three months. Every one rupee depreciation is likely to increase the revenue
loss of the three oil retailers by around 80 bln rupees, most of which is on diesel. The shares of these three companies were amongst the worst
performers, falling 2-5%, as
their fortunes are tied to the rupee-dollar movement in a big way.
The rupee hit a lifetime low of 62.03 to a dollar before recovering to end at 61.65.
However, for the week, Indian Oil and BPCL ended with significant gains.
Meanwhile, the price of Indian basket of crude has also hardened
this Week, rising over $3 a barrel. This will further complicate the matter for the three
companies. For Indian Oil, dealers see support around 208-209 rupees and the counter may
stage some recovery unless the rupee worsens further. HPCL may test its 52-week low of
176 rupees next week if concerns over rupee persist, but may recover otherwise.
BPCL is seen the best of the lot and is not expected to fall if rupee stabilise.
