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Informist, Friday, Oct 25, 2024

MUMBAI - Shares of oil companies may fall more next week as the slowdown in earnings growth, potential earnings downgrades, and the geopolitical tension in West Asia may continue to hit sentiment towards the sector, analysts said. Equities of upstream as well as downstream companies fell this week, mirroring the trend in the overall domestic stock market.

News reports said Iran is getting ready for a war with Israel in response to the ballistic missile attack at the beginning of the month. The supreme leader, Ayatollah Ali Khamenei, has ordered the military to devise multiple military plans for responding to an Israeli attack, The New York Times reported, attributing four Iranian officials.

The geopolitical tension between these countries had pushed global crude oil prices sharply higher this year, particularly in April to more than $91 per barrel when the tension had aggravated. Any surge in crude oil prices could hit the profitability of oil marketing companies, who use it as their key raw material. Meanwhile, it benefits oil producing companies as they can sell their output at a higher price. 

However, prices started to decline after the oil cartel, the Organization of the Petroleum Exporting Countries and allies, said some of the members are willing to increase their production output this year. At 2027 IST, the Brent crude futures contract traded on the Intercontinental Exchange was 1% higher at $75.30 per barrel. 

"Crude oil prices have broadly traded in range through the week as the larger risk of a full-blown war in Middle East (West Asia) receded after Israel delayed its retaliatory strategy to hit Iran military sites, while US diplomates engaging in ceasefire talks between Israel and Hamas in Beirut has also pulled back prices," Mohammed Imran, research analyst at Sharekhan by BNP Paribas, said in a note.

State-owned oil refining companies Bharat Petroleum Corp. and Hindustan Petroleum Corp. posted significantly lower-than-expected earnings for the September quarter on weak refining margins and rising expenses. Shares of both the companies extended losses after their results were released during market hours Friday and are expected to fall more next week. BPCL's stock ended 4.7% lower at INR 306.30 and that of HPCL closed 8% lower at INR 372.40. 

TOP HEADLINES
* Earnings Review: HPCL Jul-Sept net revenue INR 999 bln, lowest in four qtrs
* Earnings Outlook: Weak refining margins to hit HPCL Jul-Sept net profit
* PRESS: Government likely to scrap windfall tax on crude oil, says PM adviser
* Minister Puri says no shortage of oil, hopes global oil prices to fall

Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anjana Therese Antony
Edited by Manisha Baxla

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