Oil
Stocks Outlook for the week – 01 to 05.09.2014
( www.rupeedesk.in )
Stocks of the
state-owned oil marketing companies -- Indian Oil Corp Ltd, Bharat
Petroleum Corp Ltd
and Hindustan Petroleum Corp Ltd – are seen trading up in the first
half of next week but
may come under pressure in the latter half on profit booking.
The companies are
likely to increase diesel prices by 50 paise per liter in a few days after
which the revenue
loss on the fuel is expected to decline to less than a rupee per liter.
The price hike and
the sharp decline is seen as sentimentally positive for the three stocks
and expectations of
deregulation of the fuel after it achieves parity in a month or two may
lift the stocks in
the initial part of the week.
The oil ministry has
indicated in a recent note -- on subsidy sharing by the upstream
companies -- prepared
for the consideration of the Cabinet Committee on Political
Affairs, that it will
seek deregulation of diesel once the fuel's price reaches market parity.
Since, stocks of
these companies have gained between 10% and 20% since Aug 1 on the
back of their
improving fundamentals there is likely to be some profit booking at higher
levels in the latter
half of the week.
The impending reforms
in the oil market and the efforts being made to reduce the subsidy
burden of Oil and
Natural Gas Corp Ltd and Oil India Ltd may also keep the stocks of
these companies
upbeat.
Movement in the
stocks of Reliance Industries will be news specific and developments
on new gas pricing
mechanism will be the key.
The government has
constituted a panel comprising secretaries in ministries of power,
fertiliser,
expenditure, and additional secretary in oil ministry to review gas pricing
mechanism.
The panel held its
first meeting this week and may hold more in the next. Since, the
revision in gas
prices is seen as crucial for Reliance Industries Ltd, any news flow on the issue would continue
to influence movement in its stocks.
