HPCL, BPCL, Indian Oil fall up to 6% on higher oil prices

HPCL dipped 6% to Rs 250, followed by BPCL down 5% at Rs 343 and IOC 4% at Rs 149 on the BSE

Shares of state-owned oil marketing companies (OMCs) such as Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) were down up to 6 per cent on Monday, after a steep rise in the crude oil prices.

Oil prices rallied by about 3 per cent on Monday to their highest level since the late 2018 as the United States looked set to announce that all buyers of Iranian oil must end their import or be subject to sanctions.

Among individual stocks, HPCL dipped 6 per cent to Rs 250, followed by BPCL (5 per cent at Rs 343) and IOC (4 per cent at Rs 149) on the BSE in intra-day trade. In comparison, the benchmark S&P BSE Sensex was down 0.67 per cent at 38,876 points at 11:45 am.

According to a Bloomberg report, the Trump administration won’t renew the waivers that let countries buy Iranian crude oil without facing US sanctions, according to four people familiar with the matter, a move that could roil energy markets and risks upsetting major importers such as India and China. CLICK HERE TO READ FULL REPORT

Meanwhile, according to analysts at Narnolia Financial Advisors, the volumes of OMCs' are expected to remain subdued in the January-March quarter (Q4FY19) due to lower demand in January and February margins. OMCs are expected to improve sequentially led by the bounce back in the Singapore refining margin (benchmark) and better distillate yields.

The January-March quarter has seen low GRM and USD depreciation, both expected to hit OMCs. They have also stopped sharing their gross margins periodically. Although auto fuel prices have declined, there is always a risk of populist measures hitting the companies during election period, Motilal Oswal Securities said in March 2019 results preview.