Oil Stocks Outlook for the week – 22 to 26.02.2016
( www.rupeedesk.in )
Stocks
of oil marketing companies are likely to trade in a range and stock
movement
will mostly be determined by news flow as the focus moves on
to
the Union Budget and Railway Budget for 2016-17 (Apr-Mar), to be
detailed
on Feb 29 and Feb 25, respectively.
Oil
prices have been topsy-turvy in the last few weeks, swinging between
$25
a barrel to $32 a barrel. However, the commodity ended with their
first
weekly increase in a month after Russia and Saudi Arabia agreed to
freeze
production at January levels.
This
reflected in the gains in stocks of upstream companies Oil and
Natural
Gas Corp Ltd, Cairn India Ltd, and Oil India Ltd, with the first
two
being top gainers in energy space this week. The trend may continue
if
more countries agree on freezing output, or even cuts, to support oil
prices.
However,
refiners may see change in their business environment as
demand
for some oil products may slide going forward as summer sets in.
Gross
refining margins are likely to have peaked this quarter. We believe
that
financial performance of Indian Oil Corp Ltd, Bharat Petroleum Corp
Ltd
and Hindustan Petroleum Corp Ltd could improve in Jan-Mar, due to
strong
margins and lower inventory losses.
GRMs
should benefit from a further reduction in energy costs, lower
inventory
losses and higher gasoline and naphtha cracks. However, sharp
movement
in oil prices could hit earnings of these companies and hence,
capital gains