Oil Stocks Outlook for the week – 07 to 11.09.2015
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.