OMCs recover after two-day sell-off; HPCL jumps 6%, IOCL, Gail gain 4% each

Shares of oil & gas and state-run oil marketing companies (OMCs) rose in the early morning deals on Monday, after witnessing heavy sell-off in the last two trading sessions.

At 09:52 am, Hindustan Petroleum Corporation (HPCL) was trading nearly six and a half per cent higher at Rs 176 a piece on BSE while Bharat Petroleum Corporation (BPCL) was trading at Rs 274, up 3.32 per cent. Shares of IndianOil was trading over 4 per cent higher at Rs 123.05.

Investor confidence in public sector oil and gas companies and OMCs took a massive hit last week after the government announced cut in excise duties in petrol and diesel prices by Rs 2.50 per litre and asked the refiners to absorb a Re 1 per litre cut in excise duty on petrol and diesel.

After the announcement, global brokerages such as Goldman Sachs and Citigroup Global Markets downgraded the stocks saying the imposition of price controls was an 'unequivocal negative' that underscores 'high political risk' associated with state-owned enterprises.

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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Nifty outlook and top trading ideas by Prabhudas Lilladher for today

Nifty outlook and few trading ideas by Vaishali Parekh, research analyst - technical research at Prabhudas Lilladher:

NIFTY VIEW
Nifty on daily chart forms a bearish engulfing candle and also a trend line break brings in resistance at 11,750 levels for now, also RSI being at 60 still brings in hope for a bounce. Else market would witness a further corrective move to the level of 11,500-11,400 levels. The support for the day is seen at 38,080/11,520 while resistance at 38,530/11,640. Bank Nifty would have a range of 27,580-28,040. Most of the sectors have shown a good run up, so now some profit booking cannot be ruled out.

BUY HPCL
CMP: Rs 257.50
TARGET: Rs 290
STOP LOSS: Rs 243
The stock has made a double bottom formation pattern in the daily chart at 250 levels and currently, a revival indication is witnessed and we anticipate a further rally from here on to scale till 285 -290 levels in the coming days. The RSI also has indicated a trend reversal from the oversold zone and has signaled a buy. With the chart looking attractive and with good volume participation witnessed, we recommend a buy in this stock for an upside target of 290 keeping a stop loss of 243.

BUY TATA MOTORS DVR
CMP: Rs 144.15
TARGET: Rs 162
STOP LOSS: Rs 134
The stock has been in consolidation for quite some time at around 140 levels with a good support at around 135- 140 levels and currently has indicated a bounce to signify strength and potential to carry on the momentum still further and more upward movement can be anticipated in the coming days. Also, the RSI has signaled a buy and has maintained a positive bias and with good volume activity witnessed, we recommend a buy in this stock for an upside target of 162 keeping a stop loss of 134.

Today's picks: From Sun Pharma to HPCL, hot stocks to watch on Friday

Nifty
Current: 11,677 (fut: 11,740), Target: NA
Stop-long positions at 11,650. Stop-short positions at 11,825.
Big moves could go till 11,875, 11,600
A long 11,500p (65), long 11,900c (65) can be offset with short 11,400p (48), short 11,200c (37)

Bank Nifty
Current: 28,103 (fut: 28,229)
Target: NA
Stop-long positions at 28,075
Stop-short positions at 28,400.
Big moves could go till 28,550, 27,875
Trend has slightly negative bias

HPCL
Current price: Rs 253
Target price: Rs 247
Keep a stop at Rs 256 and go short. Add to the position between Rs 248 and Rs 249
Book profits at Rs 247

ITC
Current price: Rs 320
Target price: Rs 326
Keep a stop at Rs 317 and go long
Add to the position between Rs 324 and Rs 325
Book profits at Rs 326

Sun Pharma
Current price: Rs 640
Target price: Rs 650
Keep a stop at Rs 635 and go long
Add to the position between Rs 646 and Rs 648
Book profits at Rs 650

Today's picks: From Lupin to Bajaj Auto, hot stocks to watch on Friday

Nifty 
Current: 11,583 (fut: 11,596)
Target: NA
Stop-long positions at 11,500. Stop-short positions at 11,675.Big moves could go till 11,725, 11,475. A long 11,700c (20), long 11,500p (34) would profit if the index moves outside 11,445-11,755 by settlement.

Bank Nifty 
Current: 28,027 (fut: 28,112)
Target: NA
Stop-long positions at 27,975. Stop-short positions at 28,250. Big moves could go till 27,775, 28,450. Profit booking may continue to drag the index down.

Lupin
Current price: Rs 903
Target price: Rs 915
Keep a stop at Rs 897 and go long. Add to the position between Rs 910 and Rs 913.
Book profits at Rs 915.

HPCL 
Current price: Rs 260
Target price: Rs 255
Keep a stop at Rs 263 and go short. Add to the position between Rs 256 and Rs 257.
Book profits at Rs 255. 

Today's picks: Hot stocks to watch from HPCL to Hindustan Unilever

Nifty Current: 10,770 (fut: 10,769), target: NA Stop-long positions at 10,690. Stop-short positions at 10,850. Big moves could go till 10,900, 10,625. Huge resistance at 10,825-10,850 and selling pressure at end of session. A long 10,700p (98), short 10,600p (68) is worth holding with a stop-loss at 10,825.

Bank Nifty Current: 26,425 (futures: 26,425) Target: NA Stop-long positions at 26,300. Stop-short positions at 26,550. Big moves could go till 26,750, 26,100. Resistance at 26,450-26,500. HPCL Current price: Rs ...Read Full Article

HPCL, BPCL, IOCL gain on fall in global oil prices

Shares of oil marketing companies (OMCs) like Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) were trading higher by up to 6% in otherwise subdued market after Brent crude prices fell in the international market.
At 11:39 am; HPCL (up 6% at Rs 323), IOCL (5% at Rs 176) and BPCL (3% at Rs 424) were up in the range of 3% to 6% on the BSE, as compared to 0.07% decline in the S&P BSE Sensex.

Shares of aviation companies such as SpiceJet (up 3% at Rs 115), Jet Airways (2% at Rs 393) and InterGlobe Aviation (1% at Rs 1,233) were also up more than 1% on the BSE.

“Oil fell near $64 a barrel as Saudi Arabia and Russia prepared for a clash with allied crude producers over whether to lift output and as China and the US exchanged threats over trade,” the Bloomberg report suggested. 

Nifty outlook and top trading ideas by Tradebulls for today

Nifty outlook and top trading ideas by Sacchitanand Uttekar, AVP – Technical (Equity), Tradebulls:
Nifty Outlook: Nifty resumed its weakness after a brief pause in yesterday’s trading session as weakness intensified below the level of 10470.

Hence traders should retain shorts until 10580 is defended with an expectation of an immediate extension towards 10325.

Stock: INDIGO

Reco.: Buy
CMP: Rs 1160
Recurrence of multiple spike formations near the support 1100 & a rebound from the support zone displays early signs of distortion of the ongoing down move. Positive divergence on the daily RSI also compliments the setup & hence declines if any should be utilized to create fresh longs. Short term traders could accumulate the stock within the range of 1160-1130 & hold it for a rebound towards 1230 where its 200 DEMA is placed.

Stock: HPCL

Reco.: SELL
CMP: Rs 287
Most of the OMC’s continue to deteriorate due to the ongoing crude price effect. HPCL has been trending down for almost 10 months now & the fresh breackdown from the continuation pattern indicates aggregated weakness. Short positions could be continued with a stop above 298 with an initial target upto 272.

OMCs under pressure as Trump dumps Iran nuclear deal; HPCL falls 5%

Shares of oil marketing companies (OMCs) were under pressure falling by up to 5% on the BSE in early morning trade as crude oil prices jumped back to near 3 1/2-year highs on Wednesday.
OMCs like Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) were down between 3% and 5%, while Chennai Petroleum Corporation (CPCL) and Mangalore Refinery & Petroleum were down 1% to 3% on the BSE. On comparison, the S&P BSE Sensex was trading 0.04% lower at 35,200 points at 09:32 am.

U.S. West Texas Intermediate (WTI) crude futures traded at $70.24 per barrel, up 1.7% and near Monday's high of $70.84, which was its highest level since November 2014 after U.S. President Donald Trump pulled his country out of an international nuclear deal with Iran, sparking worries about global oil supplies, the Reuters report suggests.

Meanwhile, oil exploration & production companies like Oil India, Oil and Natural Gas Corporation (ONGC), Aban Offshore, Selan Exploration Technology, Deep Industries and Jindal Drilling & Industries were up in the range of 1% to 3% on the BSE.

Nifty outlook and top stock recos by Prabhudas Lilladher

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

NIFTY VIEW:
Nifty after a short consolidation phase has indicated a positive trigger with the RSI showing a trend reversal and also the daily trend has turned up again after 3 days. Now, the peak of 10,550 need to be breached decisively to see a fresh move upward. However, the support for the day is seen at 33,800/10,450 while resistance is seen at 34,160/10,560.

BUY HPCL
CMP: Rs 418.85    
TARGET: Rs 445    
STOP LOSS: Rs 405
The stock has made a double bottom formation pattern in the daily chart at around 400 levels and now has indicated a positive candle to signify strength and potential to rise further in the coming days. The RSI has shown a trend reversal signaling a buy and with decent volume activity witnessed, we recommend a buy in this stock for an upside target of 445 keeping a stop loss of 405.

BUY MRPL
CMP: Rs 128.20    
TARGET: Rs 140      
STOP LOSS: Rs 123
The stock has more or less formed a higher bottom formation pattern in the daily chart and the bullish candle now formed signifies a positive bias for further gains. The stock has taken support at the significant moving average of 200 DMA which lies at around 126 levels and with the RSI looking positive with a trend reversal, we anticipate a good rally in the coming days. With active volume participation seen, we recommend a buy in this stock for an upside target of 140 keeping  a stop loss of 123.

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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ONGC deal is not value accretive for HPCL shareholders: analysts

STOCK MARKET - Hindustan Petroleum Corporation Limited (HPCL) slipped 4.4 per cent to Rs 367 on the Bombay Stock Exchange (BSE) on Thursday, a day after the Union Cabinet approved the sale of its 51 per cent equity in the company to Oil and Natural Gas Corporation (ONGC) post market hours, while ruling out the possibility of an open offer to the minority shareholders of HPCL given no change in effective ownership.

Since July 12, HPCL has outperformed the market by gaining 12 per cent till Wednesday on reports that the merger with ONGC will be completed by the end of this fiscal year. ONGC, which ended 1.8 per cent higher at Rs 166 on Thursday, has gained 1.7 per cent as compared to 0.66 per cent rise in the S&P BSE Sensex since July 12.

Analysts have given a thumbs-down to the deal, which they feel will not be value accretive to HPCL’s shareholders. Going ahead, HPCL will continue to operate as a separate entity, albeit with a possibility of a merger with MRPL – another ONGC subsidiary – in the future. On the other hand, as a majority shareholder in the company, it will be within the means of ONGC to leverage HPCL's balance sheet, they say.

“The apprehension is that a full merger will not be value accretive to the shareholders of HPCL, which has enjoyed a 900 per cent appreciation in price in the last three years. That is because; HPCL and BPCL have been the two biggest beneficiaries of the free pricing of petrol and diesel,” points out a note from Angel Broking.

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HPCL rallies over 10% in two days after merger announcement with ONGC

STOCK MARKET NEWS - Hindustan Petroleum Corporation Limited (HPCL) rallied 6% to Rs 382 in intra-day trade, extending its Wednesday’s 5% gain on the BSE, after the media report suggested that the merger of the company with Oil and Natural Gas Corporation (ONGC) is likely to take place soon.

At 12:43 pm; the stock was trading 5% higher at Rs 376, against 0.66% rise in the S&P BSE Sensex. It is quoting close to its record high of Rs 390 (adjusted to 1:2 bonus shares) on February 14, 2017 in intra-day trade. ONGC, on the other hand, was down 2% to Rs 160, erases its entire previous day’s gain.

“The Cabinet is likely to consider this month sale of government's 51% stake in HPCL) to ONGC for over Rs 26,000 crore,” the PTI report suggests.

After the Cabinet nod, the government will move to appoint valuation and transaction advisers while ONGC too may decide to hire merchant bankers to arrive at the valuation of government shareholding, added report. CLICK HERE TO READ FULL REPORT.

Media reports today speculated that HPCL’s disinvestment may take place at a premium to current market price.

Analysts at SBICAP Securities believe HPCL’s marketing assets are undervalued, notwithstanding the expected competition. Further, an open offer is likely to be triggered to protect minority shareholders’ interests and prevent the risk of litigation. An event trigger, if any, is likely to accelerate value creation.

According to analysts, the expenditure of around Rs 26,400 crore to buy the government’s stake in HPCL is likely to exert further strain on ONGC’s balance sheet and constrain its ability to acquire more oil and gas assets overseas.

“ONGC’s strategy of acquiring only producing assets limits the scope of value creation; hence, the investment in HPCL’s assets is likely to be positive for ONGC’s shareholders. However, we see significant downside risks to crude prices, and ONGC is significantly levered to the same (every US$1/bbl increase/decrease in crude price results in 1.6% increase/decrease in ONGC’s EPS). Hence, we continue to prefer OMCs over upstream PSUs,” added report.

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).