Oil
Stocks Outlook for the week – 16 to 20.03.2015
( www.rupeedesk.in )
Stocks of state-owned oil marketing companies are seen
moving in a narrow range next week in the absence of any major triggers. The
trend will be dictated primarily by news flow and global crude oil prices.
There could be some sentimental impact of the petrol and diesel price revision
due on Sunday. However, it is unlikely to be significant as it is now seen as a
routine affair.
The three PSU refiners--Indian Oil Corp Ltd, Bharat
Petroleum Corp Ltd and Hindustan
Petroleum Corp Ltd--revise retail prices of petrol and
diesel once a fortnight. If these companies do go ahead and affect a hike or a
cut, their scrips are likely to move accordingly. Through the week, the three
stocks will take cues from the broad market and movement in crude oil prices
and the dollar-rupee exchange rates. The broad market will take cues from the
Budget session of the Parliament, the US Federal Reserve's stance on interest
rate hike, and the Wholesale Price Index-based inflation data for February.
The Indian basket of crude has been relatively stable
between $56 and $60 per barrel for the past few weeks and only a sharp change
in the prices would affect share movements. Global oil prices have been largely
weak on ample supplies. With the dollar firming up and big crude supply
build-ups being anticipated, the downward trajectory in global oil prices may
continue.
If crude oil prices continue to weaken, it will have an
adverse impact on upstream stocks like Oil and Natural Gas Corp Ltd, Oil India
Ltd and Cairn India Ltd. Cairn India shares could see further weakness with the
company now embroiled in a tax dispute with the government. Cairn India
yesterday said it had received a tax notice of 204.95 bln rupees for failure to
deduct with holding tax on alleged capital gains arising during 2006-07 in the
hands of Cairn UK Holdings, Cairn India's erstwhile parent company and a
subsidiary of Cairn Energy Plc.
This followed the Income Tax Department slapping a
$1.6-bln-rupee tax demand in Cairn
Energy, which still holds 9.8% stake in Cairn India.
This jolt from the tax authorities came just a week after the company decided
to cut capital expenditure sharply in view of the sharp decline in crude oil
prices, a decision that had adverse impact on the company stock.
