HPCL, BPCL, IOC: Will OMC stocks remain under pressure on excise duty cut?

According to the current chart structures, shares of OMCs needs to hold their relevant support levels to stay afloat.

In a bid to provide relief to the common man, the Finance Minister Nirmala Sitharaman announced a cut in excise duty on petrol and diesel by Rs 8 and Rs 6 per litre over the weekend. The FM also announced a Rs 200 subsidy on LPG users under the Ujjwala Yojana Scheme.

Following this development, shares of OMC (Oil Marketing companies ) like Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation are likely to be in focus in the near term. Depsite gains on the benchmark indices, the OMCs were seen trading on a flat note so far on Monday.

"Government recently announced to cut excise duty on petrol and diesel by Rs 8/6/litre given rising inflationary pressures. Accordingly, we cut FY23E earnings of HPCL/BPCL by 56-40 per cent as we lower marketing loss for diesel to Rs 3/litre (from +4/litre earlier), while increasing GRMs. OMCs ability to reduce high marketing losses of Rs 6/10/litre for Q1FY23 on petrol and diesel will be contingent on crude price correction, as high inflationary pressure will prevent meaningful retail price hikes despite excise duty cuts," wrote analysts at Prabhudas Lilladher in a recent note.

Here's an outlook on the OMC stocks for the upcoming sessions:- 

Bharat Petroleum Corporation Ltd (BPCL)

Outlook: Needs to protect 52-week low

Recently, shares of Bharat Petroleum Corporation hit a new 52-week low of Rs 324 and are seen showing some stability. Thus, until this low is protected, the stock which has tumbled over 25 per cent from its historic peak of Rs 457 could see some bounce to Rs 360. The Relative Strength Index (RSI) is holding ground above the oversold territory may add some bullish sentiment, according to the daily chart. CLICK HERE FOR THE CHART

Hindustan Petroleum Corporation Ltd (HINDPETRO)

Outlook: Support of 200-WMA

The formation of “Lower High, Lower Low” suggests a negative bias and signals a bearish trend, as per the weekly chart. That said, the stock has reached near the 200-weekly moving average (WMA) set at Rs 234 level. One cannot neglect a bounce from the major support of 200-WMA, which investors consider as the prime average for taking foremost decisions. CLICK HERE FOR THE CHART

Indian Oil Corporation Ltd (IOC)

Outlook: 200-DMA is acting as support

Among these OMC’s, the shares of Indian Oil Corporation are well placed considering the way they have sustained above the 200-day moving average (DMA) since January 2021, shows the daily chart. The 200-DMA is placed at Rs 116 mark and as long as this support is defended, the trend could see revival towards Rs 125, its imminent obstacle. CLICK HERE FOR THE CHART