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Stocks of most oil companies--including the three state-owned marketing companies--are seen positive next week in line with the broad market trend but gains will be capped unless the Indian currency strengthens further. The rupee, which opened positive yesterday, gained further after the close of trading in equity markets ending at 61.41 for a dollar. The Indian currency is expected to hold on to the gains and strengthen slightly next week. That may help stocks of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd whose revenue losses on subsidised fuels decline when the rupee strengthens. Sentiment for the companies' stocks has improved as the government has not come in the way of gradual monthly increases in diesel prices despite the elections to state assemblies. The companies are incurring a loss of 9.99 rupees on sale of every litre of diesel in the current fortnight.
However, more importantly, the broad market trend after the results of assembly elections in four major states are announced on Sunday will be the key factor guiding movement in oil stocks. Exit polls indicate a strong showing by the Bharatiya Janata Party in Madhya Pradesh, Chhattisgarh, and Rajasthan, and this is largely factored in by the market. If BJP wins in Delhi as well, then it would be a major positive, and indices could scale lifetime highs. Reliance Industries counter is seen the biggest gainer in such a scenario. Relatively low valuation, is also likely to help Reliance Industries stocks as it is nearing a solution on the deadlock over pricing of KG-D6 gas. The government is most likely to allow the company to charge a higher price for the gas and ask for a bank guarantee until the dispute over falling output in the block is resolved.
Stocks of most oil companies--including the three state-owned marketing companies--are seen positive next week in line with the broad market trend but gains will be capped unless the Indian currency strengthens further. The rupee, which opened positive yesterday, gained further after the close of trading in equity markets ending at 61.41 for a dollar. The Indian currency is expected to hold on to the gains and strengthen slightly next week. That may help stocks of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd whose revenue losses on subsidised fuels decline when the rupee strengthens. Sentiment for the companies' stocks has improved as the government has not come in the way of gradual monthly increases in diesel prices despite the elections to state assemblies. The companies are incurring a loss of 9.99 rupees on sale of every litre of diesel in the current fortnight.
However, more importantly, the broad market trend after the results of assembly elections in four major states are announced on Sunday will be the key factor guiding movement in oil stocks. Exit polls indicate a strong showing by the Bharatiya Janata Party in Madhya Pradesh, Chhattisgarh, and Rajasthan, and this is largely factored in by the market. If BJP wins in Delhi as well, then it would be a major positive, and indices could scale lifetime highs. Reliance Industries counter is seen the biggest gainer in such a scenario. Relatively low valuation, is also likely to help Reliance Industries stocks as it is nearing a solution on the deadlock over pricing of KG-D6 gas. The government is most likely to allow the company to charge a higher price for the gas and ask for a bank guarantee until the dispute over falling output in the block is resolved.
