HPCL, BPCL, IOC stocks rally up to 4% as oil dips on ME ceasefire hopes

According to reports, Egypt has revived stalled negotiations between the Israel-Hamas for a ceasefire agreement, thereby pushing crude oil prices lower.

Shares of oil marketing companies (OMCs) gained up to 4 per cent on the BSE in Thursday's intra-day trade as crude oil prices fell for a third day on Wednesday amid increasing hopes of a ceasefire agreement in the Middle East (ME). That apart, rising crude inventories and production in the US, the world’s biggest oil consumer, also contributed to the dip in oil prices.

Among individual stocks, Hindustan Petroleum Corporation (HPCL) rallied 4 per cent to Rs 515 on the BSE in intra-day deals, followed by Bharat Petroleum Corporation (BPCL) by 3 per cent to Rs 625.15 and Indian Oil Corporation (IOC) by 1 per cent at Rs 172. In comparison, the S&P BSE Sensex was up 0.30 per cent at 74,703.

Expectations that a ceasefire agreement between Israel and Hamas could be in sight, following a renewed push led by Egypt to revive stalled negotiations between the two nations, pushed oil prices lower. An end to the war would reduce concerns of a broadening of the conflict that could disrupt supply from the Middle East, Reuters reported.

Meanwhile, Indian Oil said that the company aims to strengthen electric vehicle (EV) mobility infrastructure with setting up of charging points and battery-swapping facilities at its fuel stations. The company has also signed a binding term sheet with Panasonic Group Company for formation of a JV for manufacturing cells in India. This venture will meet the expanding demand for Lithium-ion for mobility applications and energy storage systems in India.

Despite todays price gain, currently OMCs are trading up to 13 per cent lower from their respective 52-week highs touched in February 2024.

OMCs, post the decline from the highs as observed in the month of February 2024, are attractively placed at the current levels. Technical analyst at JM Financial Institutional Securities expects the stocks to bounce back towards respective all-time highs. 

OMCs stocks have strong price seasonality in the month of May. In the last 10 years, BPCL, HPCL and IOCL have closed in the positive territory on 8, 8 and 5 occasions with an average return of 4 per cent, 5 per cent and 6 per cent respectively. The Nifty in the month of May has moved by an average of 2 per cent, the analyst said.