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Stocks of state-owned oil marketing companies are seen firm next week, buoyed by strength in the rupee and on hopes of continued increase in diesel prices. However, the upside could be limited as we see selling at higher levels. The rupee continued to gain against the dollar this week, ending above the sentimentally important 60-a-dollar mark yesterday. It ended at 59.90 a dollar. A firm rupee is positive for Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp Ltd as they import over 75% of their crude oil needs. Since the companies last calculated their revenue losses on subsidised fuel sales--a fortnightly exercise--the rupee has strengthened over 2% while crude oil prices have remained stable around $103 a barrel for the Indian basket.
The revenue loss for the first fortnight of the next financial year beginning Apr 1 is expected to be significantly lower than the 3.99 bln rupees per day reported for Mar 16- 31. More importantly, the revenue loss on diesel is likely to shrink from 7.16 rupees a litre in the last 15 days of the current year as a 50-paise-per-liter hike expected next week will further ease the pressure on the companies. The near-term outlook for the Indian currency remains positive. Also, the broad market trend will have some sway on the stocks of these companies and the former is likely to take cues from the Reserve Bank of India's first monetary policy announcement in 2014-15.
On the other hand, private sector energy major Reliance Industries Ltd may shed some gains accumulated this week as a case against the government's new gas pricing mechanism comes up for hearing in the Supreme Court on Apr 1. The Election Commission has already asked the government to defer the hike in gas prices. Another case that could be an overhang on the stock is that of money laundering charges levelled on the company by the Aam Aadmi Party. The Supreme Court asked the government, this week, to file a report on the steps taken on the request of the Indian High Commission in Singapore for an investigation into the alleged 65-bln-rupee investment by Biometrix Marketing in four Reliance Industries affiliated companies. The stock is nearing its 52- week high of 928 rupees and we see the stock facing strong resistance around that level.
Stocks of state-owned oil marketing companies are seen firm next week, buoyed by strength in the rupee and on hopes of continued increase in diesel prices. However, the upside could be limited as we see selling at higher levels. The rupee continued to gain against the dollar this week, ending above the sentimentally important 60-a-dollar mark yesterday. It ended at 59.90 a dollar. A firm rupee is positive for Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp Ltd as they import over 75% of their crude oil needs. Since the companies last calculated their revenue losses on subsidised fuel sales--a fortnightly exercise--the rupee has strengthened over 2% while crude oil prices have remained stable around $103 a barrel for the Indian basket.
The revenue loss for the first fortnight of the next financial year beginning Apr 1 is expected to be significantly lower than the 3.99 bln rupees per day reported for Mar 16- 31. More importantly, the revenue loss on diesel is likely to shrink from 7.16 rupees a litre in the last 15 days of the current year as a 50-paise-per-liter hike expected next week will further ease the pressure on the companies. The near-term outlook for the Indian currency remains positive. Also, the broad market trend will have some sway on the stocks of these companies and the former is likely to take cues from the Reserve Bank of India's first monetary policy announcement in 2014-15.
On the other hand, private sector energy major Reliance Industries Ltd may shed some gains accumulated this week as a case against the government's new gas pricing mechanism comes up for hearing in the Supreme Court on Apr 1. The Election Commission has already asked the government to defer the hike in gas prices. Another case that could be an overhang on the stock is that of money laundering charges levelled on the company by the Aam Aadmi Party. The Supreme Court asked the government, this week, to file a report on the steps taken on the request of the Indian High Commission in Singapore for an investigation into the alleged 65-bln-rupee investment by Biometrix Marketing in four Reliance Industries affiliated companies. The stock is nearing its 52- week high of 928 rupees and we see the stock facing strong resistance around that level.
