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Stocks of Indian Oil Corp Ltd and Hindustan Petroleum Corp Ltd are seen volatile next week and may take cues from decision on diesel and petrol pricing while those of Bharat Petroleum Corp Ltd may remain relatively stable. Petroleum Minister M. Veerappa Moily yesterday hinted that the three companies may cut petrol prices in the next few days following the recent appreciation of the rupee and easing of global oil prices. Also, the oil companies usually announces a 50 paise/ltr increase in diesel price every month and the minister said they may continue to do so. Continuation in the periodical increase in diesel price despite the upcoming state elections may send a positive signal to the markets and help push the shares of these companies up. But, the rupee-dollar movement will continue to be the biggest factor for these stocks. The rupee stabilised between 62-63 for a dollar this week, and if it holds on or consolidates further, stocks of the oil companies may gain. The Indian rupee has strengthened significantly from its all-time low of 68.80 per dollar. Meanwhile, price of India's crude basket declined by almost $2 a barrel to $106.9 a barrel, which will further ease the woes of the oil companies. However, low valuations may still favour thes companies. Even global brokerage Credit Suisse changed its view on the stocks to neutral from negative, citing low valuations. The OMCs could have upside to retail price increases, commodity correction, a milder EPP (export price parity) outcome and potential policy clarity. The government has extended by one month the time given to the Kirit Parikh panel for coming out with recommendations on a new diesel pricing mechanism. Currently, diesel is priced on trade parity--80% weightage to import price and 20% to export price. The finance ministry is in favour of export parity pricing which is seen as negative for the oil companies. Also, BPCL will remain the favoured stock because of more positive news flow in its upstream portfolio. Having made significant discoveries in Mozambique, reports yesterday suggested that the company may have also made huge oil discovery in its Brazil block.
Stocks of Indian Oil Corp Ltd and Hindustan Petroleum Corp Ltd are seen volatile next week and may take cues from decision on diesel and petrol pricing while those of Bharat Petroleum Corp Ltd may remain relatively stable. Petroleum Minister M. Veerappa Moily yesterday hinted that the three companies may cut petrol prices in the next few days following the recent appreciation of the rupee and easing of global oil prices. Also, the oil companies usually announces a 50 paise/ltr increase in diesel price every month and the minister said they may continue to do so. Continuation in the periodical increase in diesel price despite the upcoming state elections may send a positive signal to the markets and help push the shares of these companies up. But, the rupee-dollar movement will continue to be the biggest factor for these stocks. The rupee stabilised between 62-63 for a dollar this week, and if it holds on or consolidates further, stocks of the oil companies may gain. The Indian rupee has strengthened significantly from its all-time low of 68.80 per dollar. Meanwhile, price of India's crude basket declined by almost $2 a barrel to $106.9 a barrel, which will further ease the woes of the oil companies. However, low valuations may still favour thes companies. Even global brokerage Credit Suisse changed its view on the stocks to neutral from negative, citing low valuations. The OMCs could have upside to retail price increases, commodity correction, a milder EPP (export price parity) outcome and potential policy clarity. The government has extended by one month the time given to the Kirit Parikh panel for coming out with recommendations on a new diesel pricing mechanism. Currently, diesel is priced on trade parity--80% weightage to import price and 20% to export price. The finance ministry is in favour of export parity pricing which is seen as negative for the oil companies. Also, BPCL will remain the favoured stock because of more positive news flow in its upstream portfolio. Having made significant discoveries in Mozambique, reports yesterday suggested that the company may have also made huge oil discovery in its Brazil block.
