A lower crude oil price and a weaker Dollar augurs well for the OMCs and for the India economy, Gupta said adding that it could lower India’s Current Account Deficit. He, however, sounds a caveat saying that a lower demand outlook in the face of slowing global growth and uncertainties prevailing in the stock markets may have a spillover impact on equities as an asset class, denting their prospects.
He picks Indian Oil Corporation Limited and Hindustan Petroleum Corporation Limited (HPCL) as his top picks in the sector.
Nifty Oil & Gas index has fallen 15.65% on the year-to-date (YTD) basis and is up 2.53% in March, Gupta said. The current trend in the index is sideways. On Friday, the 15-share index ended flat at 7,117.45 with 8 stocks ending in the green. The top gainers were Oil India Limited, Aegis Logistics Limited and Gujarat Gas Limited. The biggest losers were Petronet LNG Limited, Gujarat State Petronet Limited and Castrol India Limited.
The movement in crude oil prices also has a bearing on the upstream companies line Reliance Industries Limited, Oil & Natural Gas Corporation Limited. Gupta said that a rising price trend is beneficial for these companies and they gain from unsold inventory as margins go up.
It also has a bearing on the sectors where crude oil is a key input like tyre, aviation, paint and plastic. An increase in the price of crude has an inflationary impact.
ET CONTRIBUTORSSource:StockEdge
Brent fell nearly by 12% in the week, its biggest weekly fall since December. WTI futures fell 13% since Friday’s close, its biggest since last April, Reuters reported.
ET CONTRIBUTORSSource:StockEdge
“The underlying fundamentals aren’t as terrible as what is being priced in here, but there is concern that oil is not as safe a place as cash or gold,” the report said quoting John Kilduff, Partner at Again Capital LLC in New York.
Anuj Gupta on Buy: IOC | CMP: Rs 79.25 | Target: Rs 92 | Stop Loss: Rs 62 | Upside: 30%
He recommends buy on decline and the levels to enter this stock are between Rs 70 and Rs 72, Gupta said. The upside is 30% from the recommended price.
Buy: HPCL | CMP: Rs 242.55 | Target: Rs 255 | Stop Loss: Rs 212 | Upside: 10%
Buying on decline is recommended in HPCL shares as well at levels of Rs 230-232, Gupta said. The upside is 10% from the recommended price.
Gupta also picked two other stock from this index as buys:
Buy: ONGC | CMP: Rs 153 | Target: Rs 180 | Stop Loss: Rs 139 | Upside: 17%
Buy: GAIL | CMP: Rs 110.10 | Target: Rs 125 | Stop Loss: Rs 92 | Upside: 17%
Buy around Rs 105-107 with a stop loss of Rs 92, Gupta said.
Last week’s collapse of Silicon Valley Bank (SVB) and Signature Bank forced the US and Swiss governments to scramble to shore up bank liquidity, which put pressure on oil and other global assets.
Oil Outlook:
“The uncertainty of the banking crisis and the growing crude stockpiles are expected to put pressure on crude prices,” Prathamesh Mallya, Assistant Vice President – Research, Non-Agri Commodities and Currencies at Angel One Ltd said.
“Last week’s collapse of Silicon Valley Bank (SVB) and Signature Bank forced the US and Swiss governments to scramble to shore up bank liquidity, which put pressure on oil and other global assets,” he said.
Meanwhile, movement in Dollar will also have a bearing on the oil price, Gupta said. He expects rupee to trade stronger against the green back in the near term. The Dollar Index is expected to fall further to 102 which will be a positive for Indian oil imports.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
