Stocks of oil marketing companies are likely to remain range-bound next week taking cues from the dollar-rupee movement and crude oil prices as well as the trend in the broad market. The rupee gained sharply this week following the decisions on allowing foreign direct investment in multi-brand retail and permitting foreign airlines to a pie in the India sky. Yesterday, the Indian currency ended at 53.45 for a dollar, almost 1.6% stronger than a week ago.
Crude prices too have softened significantly with the Indian basket costing $106.74 on Thursday, or 8% cheaper than the previous Friday. The development is significantly positive for the state-owned oil marketing companies--Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd--as it will reduce their revenue losses on subsidised sale of fuels such as diesel, kerosene and cooking gas. However, the broad market is expected to consolidate next week because of profit booking after the recent gains. Expiry of September futures and options contract may cause some volatility in the markets.
Stock of Reliance Industries too may remain in narrow range, but will track the broad market more closely. Fundamentally the environment has not changed much for the company and most of the recent gain in its stock has been because of the positive market sentiment following measures announced by several central banks globally to boost the economy. On the positive side, refining margins have shown some improvement in recent weeks because of tighter supplies following refinery
shutdowns across the world. Refining being the company's largest business, Reliance Industries will benefit from rise in GRMs.
