Oil E&P stocks witness mixed trend

A range bound movement was witnessed as key benchmark indices alternately swung between positive and negative zone in early afternoon trade. At 12:16 IST, the barometer index, the S&P BSE Sensex, was off 8.72 points or 0.03% at 25,485.65. The 50 unit Nifty 50 index was currently off 2.45 points or 0.03% at 7,748.45. The broad market depicted strength. There were over two gainers against every loser on BSE. 1,594 shares rose and 745 shares rose. A total of 197 shares were unchanged. The BSE Mid-Cap index was currently up 0.69%. The BSE Small-Cap index was currently up 0.96%. Both these indices outperformed the Sensex.

In overseas stock markets, Asian stocks edged higher after the US Federal Reserve emphasized a gradual path for future interest rate hikes after raising the benchmark rate by 25 basis points to 0.25%-to-0.50% at the conclusion of its two-day monetary policy meeting yesterday, 16 December 2015. US stocks rallied yesterday, 16 December 2015, in the aftermath of the Fed's widely expected decision to raise the benchmark interest rate by 25 basis points. The Fed policy makers voted unanimously to raise the target range of its fed-funds rate, which had been stuck at zero for seven years.

Shares of public sector oil marketing companies (PSU OMCs) edged higher as global crude oil prices fell. Indian Oil Corporation (up 0.56%), BPCL (up 0.33%) and HPCL (up 0.1%) edged higher. Lower crude oil prices could reduce the under-recoveries of PSU OMCs on domestic sale of LPG and kerosene at government controlled prices. The government has already freed pricing of petrol and diesel.

Shares of oil exploration and production (E&P) companies were mixed. Oil India (up 1.48%) and Reliance Industries (up 0.41%) edged higher. Cairn India (down 1.53%) and ONGC (down 1.96%) edged lower. Lower crude oil prices would result in lower realization from crude sales for oil exploration firms.

Aviation stocks edged higher as crude oil prices declined. Interglobe Aviation (up 1.81%), Jet Airways (India) (up 0.98%) and SpiceJet (up 0.60%) edged higher. Aviation turbine fuel (ATF) or jet fuel typically constitutes about 50% of airlines' operating costs. Jet fuel prices are directly linked to international crude oil prices.

In the global commodities markets, Brent crude oil futures edged lower after a weekly report showed a larger-than-expected increase in US crude stockpiles. Brent for February settlement was off 26 cents at $37.13 a barrel. The contract had fallen $1.34 a barrel or 3.45% to settle at $37.39 a barrel during the previous trading session.

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