Oil Stocks Outlook for the week – 27 to 31.07.2015
(State-owned
oil companies may trade in a range next week)
Reliance
Industries Ltd's counter is likely to see a boost early next week as the
company reported
better-than-expected
Apr-Jun earnings after market hours yesterday. RIL reported standalone net
profit of 63.18 bln rupees, beating the Street's estimates of around 60 bln
rupees. More importantly, the company reported excellent average gross refining
margin for the quarter at $10.4 a barrel, considerably better than expectations
and even the present global trend.
RIL's
performance in the petrochemicals segment was also much better than
expectations. Through this week, RIL shares traded in positive zone in anticipation
of a strong performance. That trend is likely to continue for the first couple
of days in the next week as well.
Shares
of state-owned oil refining and marketing companies may trade in a range next
week in the absence of any major triggers and are likely to take cues from the
broader market. Shares of Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and
Hindustan Petroleum Corp Ltd may come under pressure early next week as investors
may choose to book profits.
However,
continued decline in oil prices and robust GRMs may provide support on the
downside. With sanctions on Iran set to go, oil prices are expected to continue
trending lower, which will be a positive for these three companies.
Also,
lifting of international sanctions on Iran will help India import more from the
country and put pressure on other west Asian nations to reduce the "Asian
premium" being charged to Indian companies.
The
stock did see some positive movement over the past couple of days on reports
that minority
shareholders
of the company are likely to vote against the terms of merger with parent
Vedanta Ltd and this has led to prospects that existing shareholders of Cairn
India may get a better deal on the merger.