www.rupeedesk.in
Stocks of state-owned oil marketing as well as upstream companies are seen in a positive band next week as the rupee-dollar situation continued to improve while the Reliance Industries counter may remain subdued after the company took an aggressive stance against the government on gas pricing. The Indian currency gained around 3.5% against the US dollar in the last three days. The rupee-dollar movement has a significant impact on the finances of the oil marketing companies--Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp.
However, the market is currently expecting a significant one-time increase in diesel prices as the revenue loss on the fuel has crossed 12 rupees a litre. Most brokerages believe that the government will be forced to increase diesel prices by 3-5 rupees per litre. It is broadly expected that the decision will be taken after the end of the monsoon session of Parliament. The move, if announced, may lead to a rally in the, stocks may lose steam if the hike is not done within the next 7-10 days.
Every one rupee increase in the value of dollar adds 80 bln rupees to the annual revenue loss of the three companies on subsidised fuel, said a finance director of one of these companies. The rupee depreciation also leads to an increase in the subsidy burden of the upstream companies--Oil and Natural Gas Corp and Oil India--that bear 33%-39% of the revenue losses.
Stocks of state-owned oil marketing as well as upstream companies are seen in a positive band next week as the rupee-dollar situation continued to improve while the Reliance Industries counter may remain subdued after the company took an aggressive stance against the government on gas pricing. The Indian currency gained around 3.5% against the US dollar in the last three days. The rupee-dollar movement has a significant impact on the finances of the oil marketing companies--Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp.
However, the market is currently expecting a significant one-time increase in diesel prices as the revenue loss on the fuel has crossed 12 rupees a litre. Most brokerages believe that the government will be forced to increase diesel prices by 3-5 rupees per litre. It is broadly expected that the decision will be taken after the end of the monsoon session of Parliament. The move, if announced, may lead to a rally in the, stocks may lose steam if the hike is not done within the next 7-10 days.
Every one rupee increase in the value of dollar adds 80 bln rupees to the annual revenue loss of the three companies on subsidised fuel, said a finance director of one of these companies. The rupee depreciation also leads to an increase in the subsidy burden of the upstream companies--Oil and Natural Gas Corp and Oil India--that bear 33%-39% of the revenue losses.
