Oil Stocks
Outlook for the week – 22 to 26.09.2014
( www.rupeedesk.in )
Focus will be on Reliance
Industries Ltd and Oil and Natural Gas Corp Ltd next week as
the date nears for announcement
on gas pricing while the state-owned oil marketing
companies may remain range-bound
as the Street expects status quo on diesel pricing till
Oct 15, the day of assembly polls
in Maharashtra and Haryana.
The panel of secretaries, set up
by the government to review and give inputs on the new
gas pricing guidelines, has
submitted its report to the oil ministry on Wednesday. The
government is likely to take a
call on the matter by Sep 30.
Most expect the government to
increase local gas prices to less than $7 per mBtu. JP
Morgan said in a report last week
that the hike may be to $6.5 per mBtu with an annual
increase of $1 thereafter.The
market is discounting gas price of $6.5-$7.0 per mBtu, and
stocks may react only if there is
a deviation.
On the other hand, stocks of
Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and
Hindustan Petroleum Corp Ltd will
continue tracking crude oil prices and the rupeedollar
movement, though the bias is
likely to be positive after this week's sharp decline.
The government has asked the
companies as well as their dealers to get ready for diesel
deregulation before Dewali, which
falls on Oct 23.
We expect benign global oil
prices to persist, paving way for de-regulation during
Q4CY14 (Oct-Dec). While HPCL is
purer play on de-regulation, BPCL's drive for
efficiency and long-term
competitiveness render it the best sector play.
Crude oil prices continue to
remain low while the Indian currency too pulled back ending
at 60.81 for a dollar today,
after breaching the 61-per-dollar mark earlier in the week.
Crude prices are expected to
remain benign in the near term. Currency movements could
hold the key next week and wide
fluctuations could have adverse impact on the shares of
the oil marketing companies.
