GOLDEN RULES FOR TRADING

Oil Stocks Outlook for the week – 07 to 11.09.2015

Oil Stocks Outlook for the week – 07 to 11.09.2015
  www.rupeedesk.in )

Stocks of state-owned oil marketing companies will continue to remain muted next week weighed down by weak trend in the broad market and volatile crude oil prices. The fluctuating Indian currency may also affect sentiments against the three companies--Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd.

However, limited downside for the three stocks since they have corrected significantly in the last few weeks. The companies are now enjoying healthy marketing margins on diesel and petrol as the cut in prices of these products, announced on Monday, was less than expected.

Currently, marketing margin for diesel is around 1.5 rupees per litre. Also, crude oil prices have
recovered slightly, which will reduce inventory losses for these companies. Crude oil and product price trends will be a key determinant for these stocks in the near term.

However, the weakness in rupee may take away some of the gains. The rupee slid below 66.5 per
dollar today before recovering slightly to end at 66.46. Since the refiners import nearly 80% of their crude, a weaker rupee inflates the bill, part of which is compensated as prices of diesel and petrol are adjusted every fortnight.

The rupee is expected to open down against the dollar on Monday as the US unit strengthened,
against a mixed basket of currencies, following the release of US employment data. Weakness in the rupee may continue and traders fear it may dip below 67-a-dollar mark next week.