Stocks of oil marketing companies may remain out of favour next
week when the street will be focused on the Reserve Bank of India's
mid-quarter review of monetary policy on Thursday. High crude prices have rendered the stocks of public sector oil majors unfriendly for investors as these state-owned companies have been piling on
huge losses due to subsidised sale of fuels.The government has so far preferred to ignore their plight, as it is more interested in taming the runaway inflation. "The street will wait for RBI's action and indices may move in a range,"a dealer said. "But oil marketing companies' stocks have little on offer for investors. Unless the government does something to curb the losses, the shares will continue to decline." The price of Indian basket of crude has passed $110 a barrel, while the last revision in fuel prices was done when it was below $70. On Thursday, cost of a barrel of crude in Indian basket was close to $112 while it has averaged $111.35 so far in March, and $101 in February. Crude is expected to strengthen further with the Libyan crisis intensifying and today's fall in crude prices following an earthquake and tsunami in Japan is expected to be short-lived. An 8.9 magnitude earthquake today hit Japan triggering massive tsunami waves, which caused extensive damage in the island nation. According to an official of a state-owned oil retailer, they are losing
around 12 rupees on a litre of diesel. Even on petrol the loss has reached 4 rupees a litre as these companies have had to refrain from raising price of the fuel which was deregulated last year. Reports of government looking to again regulate petrol prices has hurt investor sentiments further. Upstream majors Oil and Natural Gas Corp and Oil India shares gained this week as crude strengthened but may weaken next week as these companies have to share one-third of the revenue losses of oil marketing companies. ONGC, along with Cairn India, will be in focus also because the government had pushed the decision on the deal between Cairn Energy and Vedanta Resources to next week. The cabinet is now expected to take a call next week on the deal in which Cairn Energy Plc's will sell most of its stake in Cairn India to Vedanta Resources Plc.As per the deal between ONGC and Cairn India, the former shares the entire royalty burden of its producing Rajasthan blocks.
week when the street will be focused on the Reserve Bank of India's
mid-quarter review of monetary policy on Thursday. High crude prices have rendered the stocks of public sector oil majors unfriendly for investors as these state-owned companies have been piling on
huge losses due to subsidised sale of fuels.The government has so far preferred to ignore their plight, as it is more interested in taming the runaway inflation. "The street will wait for RBI's action and indices may move in a range,"a dealer said. "But oil marketing companies' stocks have little on offer for investors. Unless the government does something to curb the losses, the shares will continue to decline." The price of Indian basket of crude has passed $110 a barrel, while the last revision in fuel prices was done when it was below $70. On Thursday, cost of a barrel of crude in Indian basket was close to $112 while it has averaged $111.35 so far in March, and $101 in February. Crude is expected to strengthen further with the Libyan crisis intensifying and today's fall in crude prices following an earthquake and tsunami in Japan is expected to be short-lived. An 8.9 magnitude earthquake today hit Japan triggering massive tsunami waves, which caused extensive damage in the island nation. According to an official of a state-owned oil retailer, they are losing
around 12 rupees on a litre of diesel. Even on petrol the loss has reached 4 rupees a litre as these companies have had to refrain from raising price of the fuel which was deregulated last year. Reports of government looking to again regulate petrol prices has hurt investor sentiments further. Upstream majors Oil and Natural Gas Corp and Oil India shares gained this week as crude strengthened but may weaken next week as these companies have to share one-third of the revenue losses of oil marketing companies. ONGC, along with Cairn India, will be in focus also because the government had pushed the decision on the deal between Cairn Energy and Vedanta Resources to next week. The cabinet is now expected to take a call next week on the deal in which Cairn Energy Plc's will sell most of its stake in Cairn India to Vedanta Resources Plc.As per the deal between ONGC and Cairn India, the former shares the entire royalty burden of its producing Rajasthan blocks.
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