BPCL, HPCL, IOC: Here's how to trade oil-marketing companies' stocks

Shares of oil marketing companies (OMCs) were trading in the negative territory in the morning deals on Wednesday. While Bharat Petroleum Corporation (BPCL) traded 6 per cent lower, Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation (HPCL) were down 1.5 per cent and 4 per cent, respectively.

Stocks of OMCs have come under pressure since late July over concerns on demand, inventory losses led by soft crude prices, and weak refining margins. BPCL, HPCL, and IOC have corrected up to 22 per cent since their highs of July, while the Sensex has risen over five per cent in this period. READ MORE

Below is a look at how OMCs and BSE Oil & Gas index look on charts and how you should trade them.

S&P BSE OIL & GAS: The index is facing strong selling pressure at its 200-day moving average (DMA) placed at 12,755 levels. Going forward, if the price continues to trade below the moving average, then weakness may see an acceleration in the direction of 11,750 and 11,600 levels. The overall trend stays weak with upside seeing shorting opportunities. CLICK HERE FOR THE CHART
 
Hindustan Petroleum Corporation Ltd (HINDPETRO): With a “Death cross” pattern on the daily chart, this counter is indicating a strong negative sentiment. Few sessions back, the price failed to conquer 50-DMA and 100-DMA which led to a drop of nearly 15 per cent from Rs 210 to the current levels of Rs 180. The pessimism is accelerating continuously as indicated by a build-up of short positions. The immediate resistance comes in at Rs 190 and Rs 184 levels with price indicating weakness towards Rs 164 levels. CLICK HERE FOR THE CHART
 
Bharat Petroleum Corporation Ltd (BPCL): A breakdown below 200-DMA along with the moving average convergence divergence (MACD) breaching the zero line downward suggest a substantial weakness. This may see Rs 360 and Rs 340 levels on an immediate scale. The resistance stays at 200-DMA placed at Rs 394 levels. The volumes on the negative side are increasing. This further indicates that the the negative sentiment is likely to continue. CLICK HERE FOR THE CHART
 
Indian Oil Corporation Ltd (IOC):  The price indicates that a negative crossover of 50-DMA with 100-DMA is in progress, as per the daily chart. If that occurs, the price may see aggressive selling pressure. This may lead to a drop towards Rs 70 and Rs 66 levels. The range of Rs 80 to Rs 78 has become the most firm resistance and till the price does not conquer this range, the selling pressure may persist. CLICK HERE FOR THE CHART