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Informist, Friday, Nov. 29, 2024

MUMBAI - Shares of oil companies may see some gains next week, though sharp gains are not likely, given the probability of muted performance by the stock market as a whole, derivatives analysts said. For the near term, two analysts tracking the sector said developments in the Russia-Ukraine war and the geopolitical tension between Iran and Israel will be monitored. The war between Ukraine and Russia recently fuelled concerns about global oil supply as Russia is a major producer as well as exporter of crude oil. 

Most oil-related stocks gained this week after falling for about three weeks. Hindustan Petroleum Corp. gained the most, up 6.2%. Nirmal Bang Institutional Equities said the company's management is positive about various factors, including improved earnings from retail fuels during Oct-Dec compared to a quarter ago and the potential for government compensation for liquefied petroleum gas under recovery. The management also expects long-term gross refining margins to be healthy at $8-$9 per barrel based on capacity closures and revival in demand, the broking firm said in its strategy report. 

Refining margins of oil marketing companies are expected to rebound to the long-term average of $5-$7 per barrel and gross marketing margins remain strong, Prabhudas Lilladher said in its research report. Among upstream players, a ramp-up in production would be a key monitorable for Oil India and Oil and Natural Gas Corp., the broking firm said.

Amid speculation of a proposal to scrap the windfall gains tax, a senior finance ministry official told Informist that the government will stick to its view of lowering the tax to nil when crude oil prices are lower than $75 per barrel and increasing it when that level is breached again. "Oil prices are lower than $75 (per barrel) now, so the tax is at nil. If it goes higher, say $80 (per barrel), it will be hiked," the official told Informist. A windfall gains tax is a temporary tax imposed on profits that a company makes from the sudden increase in crude oil prices. At 2029 IST, the Brent Crude futures contract on the Intercontinental Exchange was largely unchanged at $73.30 per barrel.

On Friday, shares of oil-to-chemicals player Reliance Industries closed 1.7% higher at INR 1,292.20 on the National Stock Exchange after the company said its step-down wholly-owned subsidiary Reliance Finance and Investments bought a 21% stake in US-based Wavetech Helium for $12 million. Following this, reports said Morgan Stanley retained its 'overweight' rating on the stock, with a target price of INR 1,662. This week, the stock rose 2%.

TOP HEADLINES

* To impose windfall tax whenever crude price above $75/bbl: Fin min official

* RIL arm buys 21% stake in US co Wavetech Helium for $12 mln
* PRESS: ONGC starts talks for offshore drilling rigs worth $500 mln-$550 mln
* Indian Oil keeps petrol, diesel prices unchanged in Delhi

* EIA says US crude oil stocks fell by 1.8 mln bbl in week to Fri, exports up

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 Rajeev Pai

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