Oil Stocks Outlook for the week – 07 to 11.Jul.2014
Stocks of the state-owned oil companies both upstream and downstream are likely to gain
next week with the oil ministry proposing a gradual increase in prices of cooking gas and
kerosene along with decontrolling of diesel prices within a few months. The oil marketing
companies Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp
Ltd will see a sharp improvement in their financial burden if the proposals put forward by
the oil ministry are accepted by the Cabinet committee on politicalaffairs.
In a draft note being prepared for the next meeting of the Cabinet panel, the ministry wants
the panel to accept most proposals of the committee headed by Kirit Parikh on fuel pricing
and has batted for reducing the subsidy burden on the upstream oil companies. With the
broad market seen positive next week, the stocks of these companies will tag along on
hopes of some major reforms likely to be announced in the Budget to be presented on Jul
10. If the hopes materialise, the buzz around oil sector reforms will only get louder, pushing
the stocks of these companies further up.
Subsequently, the oil ministry may also propose a reduction in the subsidy burden of the
upstream oil companies Oil and Natural Gas Corp Ltd, Oil India Ltd, and GAIL (India) Ltd.
The ministry is of the view that the companies' ability to make huge investments required in
the exploration and production business has been hurt owing to the subsidy burden, and
they should get some relief.
However, continuance of geopolitical tensions would remain an overhang on these counters
though both rupee and oil prices recovered this week. After dipping below 60-a-dollar mark
last few weeks, the rupee recovered this week and ended at 59.7 for a dollar yesterday
which is positive of the oil marketing companies which import significant quantities of crude.
The price of Indian basket meanwhile declined to $108 this week from over $110 a barrel
last week
Stocks of the state-owned oil companies both upstream and downstream are likely to gain
next week with the oil ministry proposing a gradual increase in prices of cooking gas and
kerosene along with decontrolling of diesel prices within a few months. The oil marketing
companies Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp
Ltd will see a sharp improvement in their financial burden if the proposals put forward by
the oil ministry are accepted by the Cabinet committee on politicalaffairs.
In a draft note being prepared for the next meeting of the Cabinet panel, the ministry wants
the panel to accept most proposals of the committee headed by Kirit Parikh on fuel pricing
and has batted for reducing the subsidy burden on the upstream oil companies. With the
broad market seen positive next week, the stocks of these companies will tag along on
hopes of some major reforms likely to be announced in the Budget to be presented on Jul
10. If the hopes materialise, the buzz around oil sector reforms will only get louder, pushing
the stocks of these companies further up.
Subsequently, the oil ministry may also propose a reduction in the subsidy burden of the
upstream oil companies Oil and Natural Gas Corp Ltd, Oil India Ltd, and GAIL (India) Ltd.
The ministry is of the view that the companies' ability to make huge investments required in
the exploration and production business has been hurt owing to the subsidy burden, and
they should get some relief.
However, continuance of geopolitical tensions would remain an overhang on these counters
though both rupee and oil prices recovered this week. After dipping below 60-a-dollar mark
last few weeks, the rupee recovered this week and ended at 59.7 for a dollar yesterday
which is positive of the oil marketing companies which import significant quantities of crude.
The price of Indian basket meanwhile declined to $108 this week from over $110 a barrel
last week
