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Having rallied yesterday on hopes of hike in diesel price, stocks of state-owned oil marketing companies may pare some gains next week though on Monday they are expected to open firm. Broadly, the stocks are seen in a range. Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd increased diesel prices yesterday by around 50 paise a litre. After the government announced an increase in the number of subsidised cooking gas cylinders per family to 12 a year from nine earlier, sentiment for their stocks had turned negative as the already high subsidy burden will increase by 50 bln rupees. Also, the move gave rise to fears that the government may now force these companies to stop raising diesel prices every month as general elections are approaching.
With yesterday's hike fears have receded for now, and the revenue loss on diesel has also declined to 7.40 rupees per litre from 9.24 rupees a month ago. The revenue loss has shrunk because of decline in crude oil prices in the last one month. Positive sentiment will also help shares of Oil and Natural Gas Corp Ltd
and Oil India Ltd as they bear a significant portion of the oil subsidies. However, rupee-dollar and crude price movements would continue to dictate the trend of shares of the state-owned oil majors as well as the broad market. The rupee pulled back this week to end at 62.68 a dollar after hitting a low of 63.29 per dollar on Monday.
Movement in USD-INR (dollar-rupee) will now take centre stage. An upward rise in USD-INR will restrict market's rise and can result in selling pressure. Indian crude basket price has remained steady around $105 a barrel, but most analysts believe the commodity will trend lower in coming months as demand eases after winters.
Having rallied yesterday on hopes of hike in diesel price, stocks of state-owned oil marketing companies may pare some gains next week though on Monday they are expected to open firm. Broadly, the stocks are seen in a range. Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd increased diesel prices yesterday by around 50 paise a litre. After the government announced an increase in the number of subsidised cooking gas cylinders per family to 12 a year from nine earlier, sentiment for their stocks had turned negative as the already high subsidy burden will increase by 50 bln rupees. Also, the move gave rise to fears that the government may now force these companies to stop raising diesel prices every month as general elections are approaching.
With yesterday's hike fears have receded for now, and the revenue loss on diesel has also declined to 7.40 rupees per litre from 9.24 rupees a month ago. The revenue loss has shrunk because of decline in crude oil prices in the last one month. Positive sentiment will also help shares of Oil and Natural Gas Corp Ltd
and Oil India Ltd as they bear a significant portion of the oil subsidies. However, rupee-dollar and crude price movements would continue to dictate the trend of shares of the state-owned oil majors as well as the broad market. The rupee pulled back this week to end at 62.68 a dollar after hitting a low of 63.29 per dollar on Monday.
Movement in USD-INR (dollar-rupee) will now take centre stage. An upward rise in USD-INR will restrict market's rise and can result in selling pressure. Indian crude basket price has remained steady around $105 a barrel, but most analysts believe the commodity will trend lower in coming months as demand eases after winters.
