Earnings pressure may intensify for OMCs; HPCL, BPCL, IOCL stocks fall

Despite sharp profit revisions, a weak rupee, higher crude oil prices and the government's stance could lead to further downsides

Investor confidence in public sector oil and gas companies took a battering for the second session in a row as brokerages downgraded the stocks and the rupee plunged further following the Reserve Bank of India’s (RBI's) stance on the rupee. After losing 10-12 per cent on the bourses on Thursday post government’s announcement, HPCL, BPCL, IOCL lost another 16-25 per cent on Friday. ONGC and GAIL also shed 10-16 per cent on worries of the higher proportion of subsidy sharing.

The Street is worried as Thursday’s decision asking the refiners to absorb the cost of higher crude oil prices was a