Pre-market: Oil shares in focus after gas price hike

Markets will open higher today led by oil shares after the government announced diesel price deregulation and the gas price hike

Markets are likely to remain volatile during the truncated week while oil and gas shares will be in focus today after the government announced diesel price deregulation and the gas price hike from the current $4.2/mBtu to $5.61/mBtu. Further, the victory by BJP in the state elections of Maharashtra and Haryana will also boost sentiment.

At 8:30AM, the early indicator SGX Nifty was up 119 points at 7,938

Meanwhile, foreign portfolio investors were net sellers in equities to the tune of Rs 1,430 crore.

Asian stocks were trading higher tracking gains on Wall Street because of robust earnings from US corporations and upbeat economic data. However, investors will closely watch the developments with regards to the ongoing pro-democracy protests. The Nikkei was up 3.2% led by exporter stocks after the yen fell sharply against the US dollar. Hang Seng was up 0.6% while shares in mainland China were marginally higher with the Shanghai Composite rising 0.3%. Singapore's Straits Times was up 0.7%.

US stocks ended over 1% higher on Friday on the back of encouraging corporate earnings from Honeywell and General Electric coupled with encouraging housing data and improving consumer sentiment. Data showed that US housing starts and permits grew in September. The  Dow Jones ended up 263 points or 1.6% at 16,380, the broader S&P 500 ended up 24 points or 1.3% at 1,887 and the tech-laden Nasdaq ended up 41 points or 1% at 4,258.


Stocks to watch:

ONGC and OIL would be the biggest beneficiaries of diesel price deregulation and the gas price revision. With underrecoveries disappearing in the case of diesel, ONGC is expected to gain the most, believe oil & gas analysts.

However, it is sentimentally negative for Reliance Industries (RIL), as the revised pricing formula is not going to apply to the company till arbitration proceedings are on. Till this is resolved, the difference between the revised and earlier price of $4.2/mBtu will be credited to a gas pool account maintained by GAIL.

Oil marketing companies such as HPCL, BPCL and IOC would also be the beneficiaries following the new oil and gas reforms.

Jindal Steel and Power will be under pressure after the Central Bureau of Investigation (CBI) has registered a case for alleged cheating and criminal conspiracy related to one of its largest functional coal mines in Chhattisgarh.

However, fertiliser companies such as RCF, Chambal Fertilisers will be impacted on account of higher input costs following the hike in gas prices.

UltraTech Cement may gain after it posted 47 per cent increase in the consolidated net profit in the second quarter of FY15 beating street estimates on strong growth in sales. The consolidated net profit rose to Rs 416 crore in the July-September quarter as against Rs 283 crore last year. The revenue rose to Rs 5,772 crore against Rs 4,849 crore last year.

Force Motors may see some correction after net profit in the Jul-Sep 2014 quarter fell to Rs 25.69 crore from Rs 26.93 crore in the same quarter last fiscal.