Oil Stocks Outlook for the week – 23 to 28.02.2015
( www.rupeedesk.in )
Stocks
of the state-owned oil marketing companies are seen moving in a narrow range
next week due to lack of near-term triggers, but bias is likely to be positive
ahead of the Union Budget. Reliance Industries Ltd is though likely to extend
its weak run due to adverse news flow with regards to the ongoing investigation
in the theft of sensitive policy documents from the oil ministry. The company's
stock ended down 3.2% today after the Delhi Police today arrested seven people,
including a Reliance Industries official, for stealing confidential documents
from the oil ministry.
Pressure
on the stock could increase as investigation progresses and more names come to
fore. The company is already embroiled in several disputes with the government,
including those over gas pricing and cost inflation in its KGD6 block. The
additional negative news flow in the document theft case could take the RIL
stock further down in near term.
On
the other hand, stocks of the public sector downstream companies Bharat
Petroleum Corp
Ltd,
Indian Oil Corp Ltd and Hindustan Petroleum Corp Ltd are seen trending positive
next week as crude prices continued to move up. BPCL is seen as the best bet
among the three since it has managed the inventory well during the sharp
decline in prices of crude oil till January.
Broad
market trend will be key for upside in the three stocks. Indices are seen
volatile ahead of February derivatives contract expiry on Thursday and Budget
on Saturday.
Fear
of fall in crude price will also cap the upside in stocks of Oil and Natural
Gas Corp Ltd and Oil India. These stocks will also under-perform in comparison
with the downstream companies due to uncertainty over subsidy sharing.
The
government asked the two companies to take on more than two-third of downstream
subsidies in Oct-Dec that halved their profits during the quarter on a
year-on-year basis.