Stocks of state-owned oil marketing companies have come under pressure once again as crude oil prices have gained over the past two weeks, and the rupee has weakened further against the US dollar. These factors, along with weakness in the equities market, may lead to further downward correction in stocks of Indian Oil Corp, harat Petroleum Corp, and Hindustan Petroleum Corp.
The price of the Indian basket of crude oil touched almost $110 a barrel earlier last week after falling to below $100 a few weeks ago. Although crude oil prices softened slightly on Thursday to $107 a barrel, the trend is seen bullish. Weakness in the rupee has made matters worse. After holding at around 49.000 rupees a dollar levels, the Indian currency weakened to 50.000 rupees a dollar levels in the past two trading sessions. Despite these developments, the government has maintained silence on compensating the companies on the losses they have incurred in Jul-Sep on selling retail fuel at subsidised prices.
The petroleum ministry has sought 140 bln rupees for the three companies to partly compensate them for Jul-Sep under-recoveries. Currently, these companies are losing around 2.6 bln rupees daily on such under-recoveries. Even as the government drags its feet on the issue, Bharat Petroleum's quarterly earnings announcement is just 10 days away. Although the stocks of the three companies are seen weak, the downside will be limited at 1-2% from current levels. There are only three trading days next week, with the stock market being closed on Wednesday and Thursday due to Diwali festival.
CairnIndia
The price of the Indian basket of crude oil touched almost $110 a barrel earlier last week after falling to below $100 a few weeks ago. Although crude oil prices softened slightly on Thursday to $107 a barrel, the trend is seen bullish. Weakness in the rupee has made matters worse. After holding at around 49.000 rupees a dollar levels, the Indian currency weakened to 50.000 rupees a dollar levels in the past two trading sessions. Despite these developments, the government has maintained silence on compensating the companies on the losses they have incurred in Jul-Sep on selling retail fuel at subsidised prices.
The petroleum ministry has sought 140 bln rupees for the three companies to partly compensate them for Jul-Sep under-recoveries. Currently, these companies are losing around 2.6 bln rupees daily on such under-recoveries. Even as the government drags its feet on the issue, Bharat Petroleum's quarterly earnings announcement is just 10 days away. Although the stocks of the three companies are seen weak, the downside will be limited at 1-2% from current levels. There are only three trading days next week, with the stock market being closed on Wednesday and Thursday due to Diwali festival.
Cairn
