PSU oil shares set for rally next week
| "This week we have seen lot of consolidation in the oil marketing counters. It is likely to continue next week and there could be a rally, if the Cabinet raises the FDI cap later during the week," said Amin Merchant, an analyst with brokerage house Sykes & Ray. |
| The Cabinet is likely to announce a comprehensive foreign direct investment policy next week, which includes increasing the limit of FDI in refineries of state-run companies to 49 per cent from the current 26 per cent. |
| "This could give a good boost to the refineries stocks as companies such as Indian Oil, Hindustan Petroleum, and Bharat Petroleum bring in foreign partners for their upcoming projects," said Vinay Nair, research analyst, Khandwala Securities. |
| Analysts feel that BPCL will be the biggest gainer among the three going into next week, after the cabinet today allowed it to sell 49 per cent stake in the joint venture Bharat Shell Ltd to Shell or its affiliate for Rs 152 crore. |
| "The sale proceeds could help BPCL balance out some of its current revenue losses of subsidised sale of petroleum products and also meet its working capital needs," said an analyst with a Mumbai-based brokerage firm. |
| Analysts also expect international crude oil prices to ease next week due to expectations of a possible production increase by the Organisation of the Petroleum Exporting Countries at its December 5 meeting and a milder winter in the US. |
| "There is pressure on the OPEC to raise crude output by 500,000 barrel per day. A favourable decision will bring down international prices and thereby reduce the revenue losses of the state-run oil marketing companies," Merchant said. |
| Upstream companies Shares of Oil and Natural Gas Corp are expected to be in the positive territory next week on expectations of higher billing on crude oil sales and news of gas discovery in Rajasthan. |
| ONGC said Thursday that it has made a new gas discovery in Rajasthan's Jaisalmer basin. The company hopes to establish the reserve estimate of the discovery within three weeks. |
| The block was awarded to ONGC on a nomination basis before the government started putting exploration blocks for bidding under the New Exploration Licensing Policy. |
| ONGC Chairman and Managing Director R S Sharma said the company's gross realisation from crude oil sales during October-November stood at close to $80 per barrel against $77 per barrel during July-September quarter. |
| Analysts said Reliance Industries Ltd is also likely to remain firm next week on strong performance of its exploration and production business. |
| The company is close to striking a hydrocarbon discovery in deepwater block""MN-DWN-98/2""in offshore Mahanadi Basin. |