Web Special: Trading strategies for RIL, oil marketing companies

It was an eventful day for the oil and gas stocks on Thursday. After touching an intra-day low of Rs 789.1, Reliance Industries (RIL) bounced back smartly to end marginally up on Thursday, after a knee-jerk reaction to the allegations by India Against Corruption (IAC) activists against company’s chairman – Mukesh Ambani.

The government failed to bite the bullet and rolled back the Rs 26.5 hike it announced for the non-subsidised LPG (domestic use) thereby impacting the fortunes of oil marketing companies (OMCs) – HPCL, BPCL and IOC.

Given all these developments and the current range-bound movement of the frontline indices, what should you do with oil and gas stocks? Here is a quick look at what analysts suggest.


Kishor Ostwal, CMD, CNI Research

RIL did correct as a knee-jerk reaction to Arvind Kejriwal’s comments but smartly recovered on short covering and closed firm. We have BUY rating on the stock with target of Rs 900. In last quarter results, gross refining margins (GRMs) were robust. However, this has suddenly changed. Singapore GRM has fallen steeply in the last two weeks.

On the charts, the stock has some leg down space till Rs 765 as it is trailing its resistance level of Rs 820 after the Q2 results. We would advise investors to go long either close to support level of Rs 765 or go fresh long over Rs 820. We also do not rule out a possibility of surprise rally in RIL if it crosses Rs 820. Generally, DIWALI remains a point of attraction for traders and Nifty can rise to new high only if RIL participate in the rally.


AK Prabhakar, Senior Vice President (equity research), Anand Rathi

The much talked about allegations by Mr Arvind Kejriwal have had minimal effect on the stock, which already has an ongoing buyback programme. Past experiences suggest that any bad news fails to cast a lasting impressing on the stock as it never corrects much. The reason being that the facts were very much already in the system.

After RIL declared its gas reserves (initially) of the KGD6 basin, many power companies went on expansion spree anticipating the supply of gas from the company. But later, RIL saw the gas output decreasing despite incurring a huge cost. This has impacted the capacity expansion plans of power companies along with coal (raw material) problems, which are another cause for concern.


Ravi Nathani, technical analyst, Nsetoday.com

One could buy Reliance Industries at the current market price (CMP) or at dips with a strict stop loss of Rs 788.


Parag Doctor, Head- trading strategies, Keynote Capitals

RIL has been under-performing since quite some time now. Recent rally in the stock was capped at Rs 850. Currently the stock should be avoided for trading and one should wait for this stock to cross Rs 825.


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