Oil Stocks
Outlook for the week – 19 to 23.01.2015
( www.rupeedesk.in )
Stocks of Reliance Industries Ltd
may get a muted response when market opens next week after
the company reported
disappointing numbers for Oct-Dec due to pressure on the refining
business. The company reported
Oct-Dec earnings after markets closed yesterday.
RIL's net profit declined 8%
year-on-year to 50.85 bln rupees in the quarter ended December.
More importantly, gross refining margins
shrunk to $7.3 a barrel, from $8.3 in Jul-Sep, mainly
on account of inventory losses.
While the bottomline is broadly
in line with estimates, GRMs were significantly lower. The net
profit was lifted mainly by a
sudden and unexpected increase in other income which came at
240.2 bln rupees, 12% higher
sequentially.
The stock may not trade at lower
levels for long and dips may see increase in buying activity
which could lift it back to
around 880-900-rupee levels. However, in near term, the stock may
continue to trade in a range.
The state-owned oil marketing
companies--Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and
Hindustan Petroleum Corp Ltd--are
seen trading in a range and will mostly track crude oil prices
and the broad market.
The companies cut petrol and
diesel prices by 2.42 rupees per litre and 2.25 rupees per litre,
respectively, after lobbying hard
against the move because of the massive inventory losses due to
the sustained decline in crude
oil prices.
The government also increased
excise duty on these fuels by 2 rupees a litre. Both these moves
are likely to weigh on the stocks
early next week. The rupee's surge and fall in crude oil prices
are likely to help these
companies regain the marketing margins.
Inventory losses remain a bigger
concern and will keep traders on the edge. If crude prices recover, there could be a
positive swing in stocks of these three companies as well.
