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Informist, Friday, Dec 20, 2024

MUMBAI - Shares of oil companies in India are likely to fall further next week, though the fall is not expected to be as steep as this week, in the absence of key near-term triggers. Shares of all major upstream and downstream companies declined this week, mirroring the overall weakness in the domestic stock market. Investors will also track the movement in crude prices, which remained stable recently after the volatility caused by geopolitical tensions. 

A rise in crude oil prices can result in higher profitability for oil producers, while it can hit oil marketing players as it is a key raw material for the latter. Disruptions in oil supply due to the conflict in West Asia led to higher import costs for India, raising inflation and production costs across various sectors, Bajaj Broking said in its market outlook report. Russia and Iran are among the top exporters of crude oil in the world and conflict in these countries had earlier sparked concerns about global crude oil supply, pushing prices of the commodity sharply higher.

However, weak demand from China, a rise in the dollar index, and sluggish demand from refineries were some of the reasons that eased such worries. At 2128 IST, the Brent crude contract on the Intercontinental Exchange was 0.4% lower at $72.43 per barrel, down for the second session. The price had crossed the $90-per-barrel mark in April after tensions between Israel and Iran aggravated.

The government's push to encourage ethanol production has increased ethanol supply to oil marketing companies. Ethanol is blended with petrol to reduce fossil fuel consumption. "The policy push has meant ethanol supply to oil marketing companies increased to 5.45 billion litres in 'ethanol supply years' 2023-24 from 380 million litres in 2013-14," CRISIL said in its report. The government has a 20% blending target by ethanol supply year 2025-26, which would require more than 10.16 billion litres of ethanol, the report said. 

This week, the fall in the overall market had a ripple effect on the oil space. The Nifty Oil & Gas index closed 1.7% lower at 10607.60 points, with most constituents in the red. Among major laggards were upstream players such as Oil India and Oil and Natural Gas Corp, which fell more than 6% each this week. 

TOP HEADLINES
* Oil India appoints Abhijit Majumder as CFO effective Wednesday
* HPCL signs pact with logistics co for information on fuel stations, pricing
* HPCL board approves INR 46.79 bln lube oil modernisation project
* RIL acquires 74% stake in Navi Mumbai IIA for INR 16.28 bln
* ISMA shares with govt roadmap for ethanol blending beyond 2025
 

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

US$1 = INR 85.01

Reported by Anjana Therese Antony
Edited by Avishek Dutta

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