Oil Stocks
Outlook for the week – 13 to 17.10.2014
( www.rupeedesk.in )
Shares of major public sector oil
and gas companies are expected to extend gains next week,
although oil refining behemoth
Reliance Industries Ltd will be in the focus in the early part of
the week as it is scheduled to
detail its Jul-Sep earnings.
Reliance Industries is expected
to report on Monday subdued earnings for the Jul-Sep quarter as
the margins in its mainstay
business of crude oil refining gets eroded. The company, which
operates world's largest
single-location refinery, is expected to report a net profit of 55.18 bln
rupees for the quarter, up merely
1% from 54.90 bln rupees reported a year ago. The state-owned
marketing companies' scrip has
been witnessing steady increase over the past few weeks on the
back of a sharp and consistent
fall in the crude oil prices.
Shares of oil marketing companies
rose yesterday, bucking the trend in the broader market, as
prices of Brent crude slipped
below $90 a barrel. Shares of the three public sector oil retailer--
Indian Oil Corp Ltd, Bharat
Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd--are likely
to extend gains next week as
crude oil prices are expected to trend lower.
Crude oil futures on domestic
bourses are likely to trade with a negative bias in the coming week
tracking global prices, which are
expected to remain weak on low demand.
The oil marketing companies are
also expected to receive a boost mid-week as the government
will detail the revenue impact of
subsidised fuel sale for the fortnight starting Oct 16. At present
the companies are making a profit
of around 2 rupees per ltr on sale of subsidised diesel, which
may be extended further in the
upcoming data.
State-owned upstream companies'
shares --Oil and Natural Gas Corp Ltd and Oil India Ltd--are
also likely to receive a boost
with the decline in revenue losses faced by the retailers as the
exploration companies have to
part compensate for the losses. The positive bias will however be
capped by the fact that the
upstream companies will be impacted by the lower crude oil prices that determine their
topline.
