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Informist, Friday, Mar. 21, 2025

MUMBAI - Shares of Indian oil companies are likely to rise more next week, with soft crude oil prices favouring those of oil marketing companies and cheaper valuations supporting upstream players, two analysts tracking the sector said. Crude oil prices have been hovering around $70 per barrel so far this month since the Organization of the Petroleum Exporting Countries and its allies decided to proceed with gradual unwinding of the voluntary production cuts from Apr. 1.

This week, the Nifty Oil & Gas index gained over 5% from a week ago to 10544.20 points. The index is well placed and should move towards 10900-11000 levels, said Vipin Kumar, senior technical and derivatives analyst at Globe Capital Market. "We suggest a buy-on-dip approach in this space," Kumar said.

Fall in crude oil price aids the profitability of oil refiners as the commodity is a key raw material for them. At 2009 IST, Brent crude oil futures on the Intercontinental Exchange were down 0.2% at $71.86 per barrel. The current price is 13% lower from the peak of $82.63 per barrel in January.

Decreasing selling pressure from foreign investors also supports the near-term bullish bias for Indian oil companies. In the first half of March, foreign portfolio investors net sold INR 9.70 billion of shares of oil, gas, and consumable fuels companies, down from net sales of INR 24.34 billion month-ago.

Analysts said the focus will now turn to expectations about earnings growth of these companies in the March quarter. The earnings for the last quarter of this financial year will start before mid-April. "There is some tailwind for OMCs (oil marketing companies) based on revival in retail pump margins after the downswing in January. Fresh news flow on LPG (liquefied petroleum gas) loss compensation, could add to this tailwind," Nirmal Bang Institutional Equities said in its report Friday.

Meanwhile, the Petroleum Planning & Analysis Cell said this week that state-owned oil companies procured 2.79 billion litres of ethanol in the three months starting November. Oil companies blend ethanol with petrol to help reduce carbon monoxide emissions and is considered environment friendly.

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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 85.97

Reported by Anjana Therese Antony
Edited by Ashish Shirke

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