www.rupeedesk.in
The sudden decline in the rupee vis-a-vis the dollar after market hours today is expected to weigh on the shares of the three state-owned marketing companies when stock markets open on Monday. The stocks of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd are likely to open down 2-3% on Monday but the course through the rest of the week will depend on the rupee-dollar movement going forward.
The Indian currency fell sharply today to close at 62.66 a dollar, a fall of 1.2% from yesterday's close. The decline was severe after the close of the stock market. USD-INR (dollar-rupee) on Friday witnessed higher movement in the opening and (the) pair managed to breach 62.50 during the day with importers' demand and weaker Chinese data. However, we believe the Indian currency will regain some strength on Monday, in which case decline in the stocks of the oil companies would be limited.
Crude oil prices would also be monitored closely in the near term, as prices have remained soft over the past few days. The price of Indian basket of crude has hovered around $105 a barrel in January so far, compared with the average price of $108 per barrel in December.
However, the government's plan to increase the cap on subsidised cooking gas cylinders available to a family per year to 12, from 9 now, is a concern that will weigh on these shares. Oil companies are scheduled to announce their monthly diesel price hike on Friday. Most market participants believe that the monthly 50 paise a litre hike will be put on hold ahead of elections. However, the government has so far maintained that the companies won't be forced to curb diesel price hikes as the revenue loss on diesel still remains high at around 9.50 rupees a litre.
But, an increase in the cap on subsidised liquefied petroleum gas cylinders would be seen as a setback for the deregulation initiative taken by the government and may raise fear that the government will do away with the unpopular diesel hikes as well. Stocks of these three companies will remain subdued in the near term because of these concerns.(Bpcl, Hpcl, ONGC).
The sudden decline in the rupee vis-a-vis the dollar after market hours today is expected to weigh on the shares of the three state-owned marketing companies when stock markets open on Monday. The stocks of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd are likely to open down 2-3% on Monday but the course through the rest of the week will depend on the rupee-dollar movement going forward.
The Indian currency fell sharply today to close at 62.66 a dollar, a fall of 1.2% from yesterday's close. The decline was severe after the close of the stock market. USD-INR (dollar-rupee) on Friday witnessed higher movement in the opening and (the) pair managed to breach 62.50 during the day with importers' demand and weaker Chinese data. However, we believe the Indian currency will regain some strength on Monday, in which case decline in the stocks of the oil companies would be limited.
Crude oil prices would also be monitored closely in the near term, as prices have remained soft over the past few days. The price of Indian basket of crude has hovered around $105 a barrel in January so far, compared with the average price of $108 per barrel in December.
However, the government's plan to increase the cap on subsidised cooking gas cylinders available to a family per year to 12, from 9 now, is a concern that will weigh on these shares. Oil companies are scheduled to announce their monthly diesel price hike on Friday. Most market participants believe that the monthly 50 paise a litre hike will be put on hold ahead of elections. However, the government has so far maintained that the companies won't be forced to curb diesel price hikes as the revenue loss on diesel still remains high at around 9.50 rupees a litre.
But, an increase in the cap on subsidised liquefied petroleum gas cylinders would be seen as a setback for the deregulation initiative taken by the government and may raise fear that the government will do away with the unpopular diesel hikes as well. Stocks of these three companies will remain subdued in the near term because of these concerns.(Bpcl, Hpcl, ONGC).
