Oil
Stocks Outlook for the week – 17 to 21.11.2014
( www.rupeedesk.in )
Stocks of state-owned oil
marketing companies may recover from this week's
slide but are likely to
trade in a range next week due to lack of immediate
triggers. Crude oil
prices and rupee-dollar movement will continue to provide
direction to the stocks
of Bharat Petroleum Corp Ltd, Indian Oil Corp Ltd and
Hindustan Petroleum Corp
Ltd in the near term.
The Oil and Natural Gas
Corp Ltd counter may garner some buying interest early
next week after the
company reported better-than-estimated numbers for Jul-
Sep post market hours
Friday. However, declining oil prices and increasing
subsidy burden could
weigh on sentiments and cap upsides. Crude prices
continue to decline and
the Indian basket of the commodity hit a four-year low
of $77.19 a barrel today.
Global investment banking
and broking firm J.P. Morgan Chase and Co said this
week that crude oil
prices are likely to soften further and may bottom out only in
Jan-Mar. Even a recovery,
in the latter part of 2015, will be moderate. We see
more downside risks to
oil prices as we go into 2015.
Operationally, all the
three refining companies turned out poor numbers for Jul-
Sep. All three reported
very weak refining margins. However, given their
marketing strength and
falling oil prices, the situation may improve going
forward.
Falling crude prices and
deregulation of diesel improve earnings prospects for
OMCs (oil marketing
companies) with only uncertainty being the subsidy sharing
pattern. Reliance
Industries' stock may continue its muted performance next
week as the global
refining margin environment is still not very encouraging and
may remain under pressure
due to capacity growth in west Asia. On the other
hand, lower crude oil
prices could weigh on its upstream earnings.
Further, friction between
RIL and the government seems to be increasing with
the company telling the
Supreme Court on Friday that the new gas pricing
formula is not acceptable
to it and it has already initiated arbitration against the
government on the issue.
Hopes of an amicable solution are only getting dimmer
and that may continue to
weigh on investor sentiments.
