Oil Stocks Outlook for the week – 02 to 06.11.2015
PSU
refiners seen in range, bias negative next week
Stocks
of the state-owned oil marketing companies are seen trading in a range with
negative
bias next week, ahead of the announcement of their Jul-Sep earnings starting
with
Indian Oil Corp Ltd on Tuesday. Analysts estimate a 79% sequential decline in
the
company's
net profit for the quarter ended September at 13.4 bln rupees, as gross
refining
margins
are likely to have shrunk. While the country's second largest refiner, Reliance
Industries
Ltd, had beat estimates by reporting robust Jul-Sep GRM of $10.6 per barrel,
the
state-owned companies are unlikely to match the performance. High inventory
losses
and
a less flexible product slate may weigh on the bottom lines of IOC, Bharat
Petroleum
Corp
Ltd and Hindustan Petroleum Corp Ltd.
On
Thursday, Oil and Natural Gas Corp Ltd's subsidiary Mangalore Refinery and
Petrochemicals
Ltd reported net loss of 9.09 bln rupees for Jul-Sep as inventory loss of
nearly
$5 a barrel almost wiped out its GRM. A weak broad market may also weigh on
the
stocks of the oil companies. The bias for the broad market is seen negative
next week
ahead
of the exit polls for the Bihar assembly elections, which will be out after the
last
phase
of election ends on Thursday. Oil prices and rupee-dollar movements will
continue
to
hold sway over the stocks further decline in crude oil could weigh on the
counters of
ONGC
and Oil India Ltd.
The
Indian basket of crude has been steady around $45 a barrel for the last few
days. But
concerns
over likely oversupply in the global market will weigh on the commodity in the
near
term. Also, revision in petrol and diesel prices is due on Saturday. While any
significant
change in the prices of either of the fuels is unlikely, a cut could result in
a
sentimentally
negative reaction on the shares of the oil marketing companies when
markets
open on Monday.