Oil Stocks Outlook for the week – 03 to 07.08.2015
PSU
refiners seen in range; bias positive
( www.rupeedesk.in )
Stocks
of the state-owned oil marketing companies are seen broadly positive next week
following softening of oil prices in recent weeks, but concerns over refining
margins peaking may cap gains. Also, the broad market trend will be the key.
The market is eyeing Reserve Bank of India's monetary policy on Tuesday, and
since not many are expecting a further cut in the repo rate, indices will move with
a positive bias during the week. The Indian basket of crude oil fell below $54
a barrel this week from over $60 at the beginning of the month. Meanwhile,
companies in the sector have been clocking record refining margins, buoyed by
robust demand for products.
On
Wednesday, Essar Oil reported a sharp expansion in its gross refining margins
to $11.05 per
barrel
for Apr-Jun from $9.04 a year ago. Cogencis reported earlier this week that
Indian Oil Corp. Ltd is likely to report GRM of over $10 per barrel for
Apr-Jun, an unprecedented level for public sector refiners.
Bharat
Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd too are likely to have clocked
record refining margins and that along with high marketing margins will help
these companies report robust numbers for Apr-Jun when they announce earnings
in the second week of August. While the GRM levels will lift the sentiment,
most analysts believe these are already being priced in and GRMs are now
peaking. Traders may not place huge near-term bets on the basis of better
refining margins.
Broadly
that will keep the stocks of these three companies in a range next week with a
positive bias. For Oil and Natural Gas Corp Ltd and Oil India Ltd, concerns
remain due to lower oil prices and consensus view is that oil prices will
continue to remain soft since resumption of supplies from Iran following
lifting of sanctions would put more pressure. The near-term outlook for ONGC
and Oil India remains weak.
