Oil Stocks Outlook
for the week – 18 to 22.07.2016
(RIL in focus on
robust earnings; PSUs positive)
Stocks of Reliance Industries Ltd will be in focus next week
and are likely to benefit from positive
sentiment after the company surprised with a
better-than-expected bottom line of 75.48 bln rupees, up
18.5% on year. At $11.5 a barrel, the company's gross
refining.
The company's gross refining margin was also an improvement
over $10.4 a bbl in the corresponding
quarter last year, and $10.8 a bbl for Jan-Mar. RIL's gross
refining margin improved despite a 38% onyear decline in the benchmark Singapore refining margin. The
company has announced its Apr-Jun
earnings after market hours today. RIL is likely to trade
with a positive bias next week, in the range of 980-1,040 rupees.
Stocks of state-owned oil refining companies--Indian Oil
Corp Ltd, Bharat Petroleum Corp Ltd, and
Hindustan Petroleum Corp Ltd--are likely to remain range-bound,
but with a bullish bias next week,
and may outperform the broad Market. In the absence of any
major sectoral trigger, the trend for
downstream as well as upstream oil companies over the next
few sessions will be determined by the
movement in crude oil prices, as well as the broad market
sentiment.
A rise in output in the US and the Organization of the
Petroleum Exporting Countries member nations is likely to lead to weakness in crude oil futures on local
and global exchanges next week. The negative sentiment is likely to be exacerbated by the
International Energy Agency's report that high crude oil inventories are likely to be a major dampener for
prices.
Yesterday, Indian Oil Corp cut the prices of petrol by 2.25
rupees a ltr, and those of diesel by 42 paise
a ltr in Delhi, with corresponding changes in other states.
The Cairn India stock will be in focus in the
later part of the week, as the upstream company is scheduled
to announce it Apr-Jun earnings on
Thursday. On the charts, stocks of all oil companies are
seen trading with a positive Bias.
Fluctuation in the dollar-rupee exchange rate is also likely
to affect stocks of downstream and
upstream oil companies. If the dollar strengthens against
the rupee, it will hit refining companies and
benefit upstream players. A weak dollar, on other hand, will
help downstream companies, as India
primarily relies on imported crude oil to meet its
requirements.