Oil Stocks Outlook: Retail stocks to track broader indices next wk

[B. Karthick]

Oil Stocks Outlook: Retail stocks to track broader indices next wk
Saturday, Sep 27

Shares of state-run oil marketing companies are likely to track
broader markets next week as there are no major triggers in the
sector.
If the $700 bln U.S. bailout package for the financial sector is
announced next week, markets could see a bounce back that will also
lead to some recovery in the oil marketing stocks.
The broader indices fell by over 6% on week as uncertainty
prevailed over the bailout package.
U.S. President George W. Bush yesterday made his intentions clear
that his administration will pushed ahead with the bailout package.
"The legislative process is sometimes not very pretty, but we are
going to get a package passed," Bush said.
The oil retailing stocks are caught in a Catch-22 situation as the
bailout package will on one hand help improve the market sentiment,
but at the same time could push up crude oil prices.
Crude oil contract for November delivery on the New York
Mercantile Exchange settled at $108.02 Thursday.
The Indian basket, which had touched an eight-month low of $86.40
a barrel earlier this month, rose to $96.94 a barrel Thursday.
We expect shares of upstream counters like Oil and Natural Gas
Corp. Ltd. and Reliance Industries Ltd. to be down next week on some
negative news flows.
Petroleum Secretary R.S. Pandey ruled out any immediate plans to
raise prices of gas sold under administered mechanism at subsidised
rates.
ONGC Chairman R.S. Sharma said that the resultant loss due keeping
prices unchanged is likely to touch 12 bln rupees in 2008-09 as
against 9 bln rupees in the last financial year.
The gas business of ONGC, which supplies nearly 80% of the gas
sold under administered pricing mechanism, is increasingly become a
burden for the company.
RIL shares are seen weak due to the delay in gas production from
its prolific D6 Block in Krishna-Godavari Basin.
RIL Chief Executive Officer (Oil and Gas Business) P.M.S. Prasad
had said recently the company will commence gas production from the D6
block from January.

Following are this week's closing share prices, in rupees, of
leading oil companies on National Stock Exchange compared with
previous week:

Company Closing price Closing price %
Change
Sep 26 Sep
12

Oil and Natural Gas Corp 1,035.40 1,071.25
-3.3
Indian Oil Corp 389.05
395.85 -1.7
Bharat Petroleum Corp 335.05 345.60
-3.0
Hindustan Petroleum Corp 229.70 235.10
-2.3
Reliance Industries 1,963.20
2,055.10 -4.5
Cairn India 217.90
220.90 -1.3

Nifty 3985.25
4245.25 -6.1
Sensex 13102.18
14042.32 -6.7

End

B.Karthick
Research Analyst.