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Stocks of state-owned oil marketing companies are seen positive next week following the recovery in rupee and softening of crude oil prices but gains may be capped as revenue losses on subsidised fuel sales continue to remain high. Stocks of state-owned upstream majors Oil and Natural Gas Corp and Oil India too may gain in the near term. The Indian currency yesterday ended at 61.43 to a dollar, compared with 62.50 last week and analysts said it may gain further next week. Meanwhile, the Indian crude basket remained stable this week at around $107 a barrel. We believe that in the near term crude prices may fall below $100 because of rising supplies and easing geo-political tensions in West Asia. Both these developments would help stocks of Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp as lower crude prices and a stronger rupee will improve their financial significantly. The daily revenue losses of these companies on subsidised fuels--diesel, kerosene and cooking gas--have already declined by 11% this month to 4.32 bln rupees from 4.86 bln rupees in the fortnight ended Sep 30. Most importantly, the revenue loss on diesel shrunk by 27.5% during this period to 10.51 rupees a ltr. Most brokerages have turned positive on these stocks and unless the trend in rupee or crude reverses, the stocks are expected to consolidate gains. Oil and Natural Gas Corp will be a big beneficiary of the reduction in revenue loss of refining companies as it stocks almost 40% of the losses. The stock has been oversold and may pick-up in the near term. However, Reliance Industries may continue to remain under pressure due to its ongoing dispute with the government over KG-D6.
In around two weeks, the Cabinet is likely to take up a proposal that may deprive Reliance Industries from getting the benefits of the new gas pricing policy for its onceprolific KG-D6 block. Until the Cabinet decision is announced, investors may not go for the stock as RIL not getting a higher price for KG-D6 will be a big setback. The petroleum ministry wants the Cabinet to vet the proposal that till the matter is decided by technical experts, the new formula will not apply for RIL's KG D6 block.
Stocks of state-owned oil marketing companies are seen positive next week following the recovery in rupee and softening of crude oil prices but gains may be capped as revenue losses on subsidised fuel sales continue to remain high. Stocks of state-owned upstream majors Oil and Natural Gas Corp and Oil India too may gain in the near term. The Indian currency yesterday ended at 61.43 to a dollar, compared with 62.50 last week and analysts said it may gain further next week. Meanwhile, the Indian crude basket remained stable this week at around $107 a barrel. We believe that in the near term crude prices may fall below $100 because of rising supplies and easing geo-political tensions in West Asia. Both these developments would help stocks of Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp as lower crude prices and a stronger rupee will improve their financial significantly. The daily revenue losses of these companies on subsidised fuels--diesel, kerosene and cooking gas--have already declined by 11% this month to 4.32 bln rupees from 4.86 bln rupees in the fortnight ended Sep 30. Most importantly, the revenue loss on diesel shrunk by 27.5% during this period to 10.51 rupees a ltr. Most brokerages have turned positive on these stocks and unless the trend in rupee or crude reverses, the stocks are expected to consolidate gains. Oil and Natural Gas Corp will be a big beneficiary of the reduction in revenue loss of refining companies as it stocks almost 40% of the losses. The stock has been oversold and may pick-up in the near term. However, Reliance Industries may continue to remain under pressure due to its ongoing dispute with the government over KG-D6.
In around two weeks, the Cabinet is likely to take up a proposal that may deprive Reliance Industries from getting the benefits of the new gas pricing policy for its onceprolific KG-D6 block. Until the Cabinet decision is announced, investors may not go for the stock as RIL not getting a higher price for KG-D6 will be a big setback. The petroleum ministry wants the Cabinet to vet the proposal that till the matter is decided by technical experts, the new formula will not apply for RIL's KG D6 block.
