Fuel-price cut: Goldman, Citigroup downgrade oil retailers IOC, BPCL, HPCL

Goldman Sachs Group Inc. and Citigroup Global Markets Inc. downgraded the stocks of India’s state-run fuel retailers after the government on Thursday asked them to subsidize retail fuel prices.

Citigroup downgraded Bharat Petroleum Corp Ltd., Hindustan Petroleum Corp Ltd. and Indian Oil Corp Ltd. to sell, while Goldman Sachs lowered the first two companies to sell, after the government cut the excise tax on gasoline and diesel by 1.5 rupees (2 cents) a liter and asked state-run oil marketing companies to absorb another 1 rupee/liter on the sale of these fuels.

The announcement came just before the market closed on Thursday, driving refiners’ stocks down. The S&P BSE Energy Index tumbled 6.7 percent, the most since August 2015, while each of the three state-run refiners closed more than 10 percent lower.

The imposition of price controls is an “unequivocal negative” that underscores “high political risk” associated with state-owned enterprises, Citigroup’s analyst Saurabh Handa wrote in a note.

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Today's picks: From BPCL to Cipla, hot stocks to watch on Wednesday

Nifty
Current: 11,067 (fut: 11,097)
Target: NA
Stop-long positions at 11,000.
Stop-short positions at 11,175. Big moves could go till 11,250, 10,950. A long 11,000p (32), long 11,200c (22) has breakevens at 11,254, 10,946 with 2 sessions to go.

Bank Nifty
Current: 25,330 (fut: 25,390)Target: NA
Stop-long positions at 25,200.
Stop-short positions at 25,450. Big moves could go till 25,000, 25,750. Trend could go negative again.

Indiabulls Hsg
Current price: Rs929
Target price: Rs945
Keep a stop at Rs920 and go long. Add to the position between Rs939 and Rs942.
Book profits at Rs945.

BPCL
Current price: Rs364
Target price: Rs359
Keep a stop at Rs367 and go short. Add to the position between Rs360 and Rs361.
Book profits at Rs359.

Cipla
Current price: Rs662
Target price: Rs675
Keep a stop at Rs656 and go long. Add to the position between Rs669 and Rs672.
Book profits at Rs675.

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Today's picks: From BPCL to Zee, hot stocks to watch on Thursday

Nifty
Current: 11,477 (fut: 11,512) Target: NA
Stop-long positions at 11,425. Stop-short positions at 11,585. Big moves could go till 11,375, 11,650. A long 11,400p (92), short 11,300p (65) will gain 15-20, if the market falls below 11,400.

Bank Nifty
Current: 27,376 (futures: 27,501) Target: NA
Stop-long positions at 27,350. Stop-short positions at 27,625. Big moves could go till 27,850, 27,150. Downtrend could continue.

BPCL
Current price: Rs 350 Target price: Rs 345
Keep a stop at Rs 353 and go short. Add to the position between Rs 346 and Rs 347. Book profits at Rs 345.

Sun Pharma
Current price: Rs 664 Target price: Rs 675
Keep a stop at Rs 658 and go long. Add to the position between Rs 672 and Rs 674. Book profits at Rs 675.

Zee Entertainment
Current price: Rs 482 Target price: Rs 472
Keep a stop at Rs 485 and go short. Add to the position between Rs 474 and Rs 475. Book profits at Rs 472.

Today's picks: From Tata Steel to BPCL, hot stocks to watch on Thursday

Nifty
Current: 11,570 (fut: 11,587), Target: NA
Stop-long positions at 11,490. Stop-short positions at 11,655. Big moves could go till 11,450, 11,700. A long 11,700c (24), long 11,400p (24) will gain if there's a 2% move in either direction by settlement.

Bank Nifty
Current: 28,258 (fut: 28,289), Target: NA
Stop-long positions at 28,175. Stop-short positions at 28,400. Big moves could go till 27,950, 28,625. Up trend may be halted by profit-booking.

Tata Steel
Current price: Rs 582
Target price: Rs 572
Keep a stop at Rs 588 and go short. Add to the position between Rs 575 and Rs 577.
Book profits at Rs 572.

Tech Mahindra
Current price: Rs 709
Target price: Rs 720
Keep a stop at Rs 702 and go long. Add to the position between Rs 715 and Rs 718.
Book profits at Rs 720.

BPCL, HPCL, IOCL slip 6%; Jet Airways hits 52-week low as oil prices rise

Stock market - Shares of oil marketing companies (OMCs) such as Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOCL) have slipped up to 6% on the BSE in intra-day trade as oil prices rise amid supply disruptions.
At 10:50 am; the S&P BSE Oil & Gas index plunged 2.6% or 364 points at 13,810 points, as compared to 0.01% decline in the S&P BSE Sensex.

Among airlines companies, Jet Airways (India) hit a 52-week low of Rs 366, down 3% on the BSE in intra-day trade, while InterGlobe Aviation (down 2% at Rs 1,143) and SpiceJet (down 1.5% at Rs 112) too trading lower on the BSE.

Oil prices rose on Wednesday following supply disruptions in Libya and Canada and after US officials told oil importers to stop buying Iranian crude from November, the Reuters report suggested.

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Modi has an oil price headache and Saudi Arabia may just make it worse

India’s Prime Minister Narendra Modi has an oil problem. And it’s set to worsen with Saudi Arabia rooting for the commodity to push through the $80 barrier.

Modi’s government made the most of cheap oil by substituting any fall in prices with taxes that kept retail fuel rates unchanged for consumers and boosted the federal revenue. Now, pressure is mounting to forego some of that windfall as pump prices of gasoline and diesel hit records, likely marring the ruling party’s prospects at the national ballot in 2019.

“There is a strong case for the central government to take another excise duty cut, and ask state governments to reduce value added tax,” Anil Sharma and Ravi Adukia, analysts at Nomura Financial Advisory and Securities India Pvt. wrote in a note Tuesday.

Fuel prices have started to pinch as Brent, the benchmark for more than half of the world’s oil, hit $80 a barrel last week. It’s still short of its all-time high of $147.50. But cutting local taxes, which account for more than half of the retail gasoline and diesel prices, would stretch government finances at a time when the subsidy burden on kerosene and cooking gas is climbing.

Buy BPCL, DCB Bank and Madhucon Projects, says Prabhudas Lilladher

STOCK MARKET - Nifty outlook and key trading ideas by Vaishali Parekh, Research Analyst - Technical Research at Prabhudas Lilladher:

NIFTY VIEW:
Market witnessed choppiness with a slight weak opening breaching the support of 10,080 for some time however bounced back to close above 10100 levels. The support for the day is seen at 10,070 while resistance is seen at 10,160.

MADHUCON PROJECTS - BUY
CMP: Rs 33.50  
STOP LOSS: Rs 25
TARGET: Rs 50 - 60
Madhucon project is showing bottoming out at 25 levels after a corrective move from 60 levels, the RSI  is supporting for an upmove towards 50-60. We recommend a buy in this stock keeping a stop loss of 25 for an upside target of 50 – 60.

DCB BANK - BUY
CMP: Rs 185
STOP LOSS: Rs 178
TARGET: Rs 200 – 205
The stock has been moving around in a consolidation phase and with the RSI indicator bouncing back from its oversold zone, has indicated a positive buy signal. We recommend a Buy in this stock with a promising upside target of 200 – 205 keeping a stop loss of 178.

BPCL - BUY
CMP: Rs 500
STOP LOSS: Rs 470
TARGET: Rs 550 - 560
The stock has given a bullish candle pattern after a short consolidation period and we anticipate it to give a return of around 7% -8% from here on. The RSI indicator has also given a Buy signal by reversing its trend. We recommend a buy in this stock keeping a stop loss of 470 for an upside target of 550 - 560.

Nifty outlook and top trading calls for today's trade: Prabhudas Lilladher

STOCK MARKET - Few trading ideas by Vaishali Parekh, Research Analyst - Technical Research at Prabhudas Lilladher:
NIFTY VIEW:
Nifty has given sideways move; a confirmation comes only with a cross of 10,350-10,380 levels for a strong uptrend. The support for the day is seen at 10,250, while resistance is seen at 10,340.

BUY BPCL
CMP: Rs 504.45      
TARGET: Rs 545      
STOP LOSS: Rs 488
The stock has maintained a good upward trending movement and now again a higher bottom formation has been made indicating a further decent rise in the coming days. The indicators like RSI has shown a trend reversal thus signaling a buy and with the stock maintaining above the 200-DMA, the bias is maintained positive. With good volume activity seen, we recommend a buy in this stock for an upside target of Rs 545 keeping a stop loss of Rs 488.

BUY INDIABULLS REAL ESTATE
CMP: Rs 233.05      
TARGET: Rs 255    
STOP LOSS: Rs 220
The stock has been maintaining a good support at around Rs 203 and it has given a bounce again from that level. The bullish candle indicates a positive bias with potential and strength to rise further in the coming days and also it has given a breakout above the 200-DMA. With the RSI also indicating a trend reversal, the stock looks promising and we recommend a buy in this stock for an upside target of Rs 255 keeping a stop loss of Rs 220.

HPCL, BPCL, IOCL trade firm after government cuts excise duty on fuels

shares of all three nation-owned oil marketing agencies (OMCs) had been trading better by up to four% on BSE in early morning trade after the authorities cut the excise obligation on both branded and unbranded petrol and diesel by Rs 2 a litre from Wednesday.

Hindustan Petroleum corporation confined (HPCL), Bharat Petroleum organisation constrained (BPCL) and Indian Oil business enterprise (IOCL) have received among 3% and 4%, extending their gains for the beyond 2 days on the BSE.

At 9:43 am, those 3 stocks were trading better in the range of one% to three%, in comparison to zero.18% upward thrust within the S&P BSE Sensex.

over the last few weeks, proportion prices of IOCL, HPCL and BPCL have declined by greater than 10% as in opposition to less than 1% fall inside the benchmark index.

“The decline in proportion expenses displays rising issues after some media reports of re-creation of subsidy burden, rise in crude oil fees, decline in excessive speed diesel or HSD and MS cracks publish typhoon Harvey within the US and worldwide rating organisation Moody’s statement that borrowings of oil marketing agencies will increase with dividend fee and capital expenditure within the modern-day monetary year,” analyst Nirmal Bang stated in recent file on oil & gas quarter.3

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HPCL, Indian Oil, BPCL hit 8-week low; HPCL falls 5% intra-day

Stocks of oil marketing businesses (OMCs) Hindustan Petroleum enterprise (HPCL), Bharat Petroleum enterprise (BPCL) and Indian Oil agency (IOCL) hit their respective eight-week lows at the BSE.

At 9:49 am, HPCL, BPCL and IOCL had been down within the variety of 2% to 3%, compared to 0.06% upward push within the S&P BSE Sensex. In past one month those three stocks have underperformed the marketplace by way of falling between 10% and 13% towards 1.9% decline inside the benchmark index.

some of the individual shares, HPCL has dipped 5% to Rs 397 on BSE in intra-day change after the media report endorse that credit score Suisse cuts rating on the stock.

OMCs have corrected by way of 13-14% from their 52 week highs as clamor grows over higher domestic retail prices, weaker gasoline consumption in Aug'17 and rising crude rate created a great storm.

Analysts at antique stock broker discover the correction as an possibility to add the names.

“The concerns are transitory as global Motor Spirit (MS) and excessive velocity Diesel (HSD) crack spreads have already started easing off (as US refinery utilisation improves), which in the end must replicate in domestic charges and b) healthy car sales over Jul'17 & Aug'17 have to pave way for higher future gas intake,” the brokerage firm said in a report.

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Indian Oil, HPCL, BPCL gain on report of kerosene subsidy removal

STOCK MARKET - Shares of state-owned oil refiners rallied by up to 5% on BSE in intra-day trade on report that the government will end subsidy on kerosene.

Indian Oil Corporation (IOC) gained 5% to Rs 388, while Hindustan Petroleum Corporation (HPCL) surged 4.4% to Rs 401 and Bharat Petroleum Corporation (BPCL) rose 3% to Rs 499 on BSE in intra-day trade. On comparison, the S&P BSE Sensex was down 159 points or 0.49% at 32,318 at 10:25 am.

The government has asked them to raise prices of subsidised kerosene prices by 0.25 paise every fortnight until the subsidy is eliminated, or until further orders, an Economic Times report suggests.

Earlier this week, the three government-owned oil marketing companies (OMCs) have been asked to raise domestic LPG prices by Rs 4 a cylinder every month. Earlier, from July 1, 2016, the government had allowed them to increase the price by Rs 2 a month, a Business Standard reported.

The Reserve Bank of India (RBI) on Tuesday stated that the administered prices of liquefied petroleum gas (LPG) and kerosene are set to rise with the calibrated reduction in subsidy.

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5 Nifty companies announce bonus shares in 2017; highest in 11 years

MARKET NEWS - Engineering & construction giant Larsen & Toubro (L&T) and state-owned oil marketing company, Bharat Petroleum Corporation (BPCL) from the Nifty50 index in last week declared bonus shares in the ratio of 1:2 i.e. 1 new bonus equity share for every existing 2 equity shares.

Besides these two, total five companies including ICICI Bank, Wipro and Gail (India) from the index announced bonus shares thus far in the current calendar year 2017 (CY17). The number of companies from the Nifty50 index rewarding bonus shares to their shareholders is the highest in past 11 years.

Earlier, during the entire calendar year 2006, total seven companies – Cipla, Tata Consultancy Services (TCS), Infosys, Dr Reddy’s Laboratories, L&T, Oil and Natural Gas Corporation (ONGC) and HCL Technologies – from the benchmark index had issued bonus shares.

In 2015 and 2010, five companies from the Nifty 50 issued bonus shares, but Aurobindo Pharma in 2015 and Bajaj Auto and Zee Entertainment in 2010, were not part of the index in that particular year.

In last calendar year 2016, three companies – ONGC, BPCL and ITC – issued bonus shares, while in CY2015, Tech Mahindra, HCL Technologies, Infosys and Kotak Mahindra Bank had declared bonus shares, according to data compiled from CapitalinePlus.

Thus far in 2017, the equity markets have recorded its best ever start during past eight years, with the Nifty 50 index gaining 17.5% between January and May, 2017. In 2009, the benchmark index had rallied 50% during the same period.

Meanwhile, in first five months of CY17, as many as 36 companies announced bonus to their equity shareholders, against 25 firms declared bonus shares in the same period of CY16. In CY13, total 114 companies announced bonus shares, followed by 49 in CY14, 59 in CY15 and 69 in CY16.

BPCL had issued bonus shares for the past two consecutive years and third time in five years. In May 2016 and in May 2014, the state-owned oil marketing companies declared bonus shares in the ratio of 1:1 i.e. one bonus shares for every one share held.

Market observers say bonus shares are being given to improve liquidity, besides rewarding the shareholders. After the issue, the stock price gets adjusted according to the bonus ratio. The total market value of the company, however, remains the same.

A bonus share issue also indicates that the company is confident about the business’s capacity to generate value for a larger number of investors. That apart, it also helps in boosting the trading volume at the bourses, as more number of shares are traded.

Worries around OMCs appear to be overdone?

Stocks of oil marketing companies (OMCs) namely Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) have lagged the S&P BSE Sensex since December 9 as the Opec and non-Opec nations agreed to cut crude oil production by 1.2 million barrels of oil equivalent per day from January 1, 2017. These stocks have fallen anywhere between 2-6 per cent in this period versus a per cent fall in the Sensex. While crude oil prices have come off by 0.6 per cent to $53.25 a barrel in this period, most analysts expect this metric to surge going forward and touch $60 a barrel levels. Rising crude oil prices are negative for OMCs as they may not always be in a position to pass on this hike and it is also likely to result in higher working capital requirements. But the fears around these stocks could have been overdone.
Historical evidence suggests that the government has deployed excise duty as an efficient tool to reduce the burden of rising crude oil prices on both the OMCs as well as the end consumers. The trend is likely to continue this time around as well, estimate analysts. "We believe at $60 a barrel, excise duty rollbacks are likely, and possibly VAT cuts too. These cuts would be structurally positive for OMCs and reduce the risk of adverse marketing margins," says Sabri Hazarika of PhillipCapital. Though the jury is out on whether the government would bear the entire burden of oil price increase, even a partial support on this front would aid OMCs (read more).