Oil Stocks Outlook for the week – 09 to 13.03.2015
( www.rupeedesk.in )
Stocks
of the state-owned oil marketing companies are seen muted early next week with
the
companies
facing problems with reimbursement of subsidies for liquefied petroleum gas
extended
through the direct benefit transfer scheme but intra-week movement could be
range
bound.
Since
the launch of the scheme in November, the companies have been paying the money
from their own account and the government has not started reimbursing them at
all. IOC alone has accumulated around 40 bln rupees of the subsidy on its own
account while HPCL and BPCL together have paid a subsidy of 30-40 bln rupees.
The impact of the delay would be that our borrowings will go up to some extent
and the interest outgo, too, will grow.
The
news could dampen sentiments at a time when the government has been working to
improve the financial conditions of the three companies through deregulation
and the direct benefit transfer scheme. However, through the week the three
stocks will take cues from the broad market and movement in crude oil prices.
The
Indian basket of crude has been relatively stable between $58 and $60 for the
past few
weeks
and only a sharp jump in the prices would affect stock movements.
On
the other hand, Cairn India stocks could see further weakness following its
decision to cut
capital
expenditure sharply in view of the sharp decline in crude oil prices. It is
normal for
upstream
companies to cut investments when crude prices trend lower.
