Stocks of the state-owned oil marketing companies--Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd--are seen weak in the near term, in the absence of any major positive triggers amid rising crude prices and continued weakness in the rupee. The price of the Indian basket of crude oil has risen to nearly $113 a barrel, from around $100 less than a month ago. Last Friday, the country's crude basket cost $110 per barrel.
The rupee also has remained stubborn over 55 for a dollar, pushing up costs for oil refiners who import over 75% of their requirement. Also, the government has refrained from any increase in the price of sensitive fuels like diesel, kerosene and cooking gas--all of which are highly subsidised and causes heavy losses to the retailers.
Indian Oil Corp is seen relatively better placed among its peers and may witness some consolidation at current levels. Shares of Reliance Industries, which has already risen significantly over the last two weeks, may see further upside after the company negotiated a settlement with the government on development plans for KG-D6.
The government last week approved the company's investment plan for several fields in KG-D6 basin, after the company agreed to give the Comptroller and Auditor General of India access to KG-D6 accounts.
We believe RIL's share price is discounting nearer-term concerns, and the short term outlook justifies upside potential of 17%, current share price is giving little credit to management for refocusing investment in core activities and its potential impact on cash returns. Stock is on a strong footing on technical charts too.
www.rupeedesk.in
The rupee also has remained stubborn over 55 for a dollar, pushing up costs for oil refiners who import over 75% of their requirement. Also, the government has refrained from any increase in the price of sensitive fuels like diesel, kerosene and cooking gas--all of which are highly subsidised and causes heavy losses to the retailers.
Indian Oil Corp is seen relatively better placed among its peers and may witness some consolidation at current levels. Shares of Reliance Industries, which has already risen significantly over the last two weeks, may see further upside after the company negotiated a settlement with the government on development plans for KG-D6.
The government last week approved the company's investment plan for several fields in KG-D6 basin, after the company agreed to give the Comptroller and Auditor General of India access to KG-D6 accounts.
We believe RIL's share price is discounting nearer-term concerns, and the short term outlook justifies upside potential of 17%, current share price is giving little credit to management for refocusing investment in core activities and its potential impact on cash returns. Stock is on a strong footing on technical charts too.
www.rupeedesk.in
