Oil firms outperform Sensex

SECTOR IN THE NEWS

Public sector oil marketing companies (OMCs) outperformed the Sensex last week after oil prices hit a five-month low. Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC) have appreciated more than 10 per cent as compared with the one-per cent fall in the Bombay Stock Exchange’s (BSE) benchmark index, the Sensex.

Last week, Brent crude oil prices declined by 7.42 per cent from $112.50 a barrel on September 1 to $104.15 a barrel on September 5. Oil prices have declined by 29.3 per cent from the $147.27 a barrel record hit on 11 July this year.

BPCL and HPCL are among the largest gainers having appreciated 18 per cent each. The market price of BPCL moved up by Rs 54.60 from Rs 303.35 to Rs 357.95 and of HPCL by Rs 35.60 to Rs 236.55 last week. IOC, the largest OMC, reported a 11.3 per cent rise in its price from Rs 401.45 to Rs 446.60 on BSE. The combined trading volume on these three counters jumped by 210 per cent with 16.2 million equity shares changing hands as compared with 5.24 million shares traded in the earlier week on BSE and NSE. In the F&O segment, BPCL added a robust 55.21 per cent shares while HPCL and IOC saw closure of open interest.

Lower crude oil prices will reduce under recoveries of oil firms on the retail sale of petrol and diesel since India imports nearly 70 per cent of its crude oil requirement. Oil firms have to sell petrol and diesel at government mandated prices, which resulted in them being hit hard when oil prices saw a sharp surge in recent months.