Foreign institutional investors, on the other hand, have reduced their stake in public sector oil companies.
Analysts tracking the oil sector point out that valuations of public sector oil companies are lower than the broader Sensex. Given the volatility in the broader markets over the last few months, mutual funds are viewing PSU oil stocks as less-risky investments with lower downside risks.
ONGC trades at about 8.5 times estimated FY09 earnings, while BPCL quotes at 4.3 times estimated FY09 earnings, point out analysts. In contrast, the Sensex at 16,244.19 trades at nearly 16.9 times forward earnings.
Meanwhile, the mutual fund holding in GAIL was 4.05 per cent at the end of the March 2008 quarter compared to 3.47 per cent at the end of the December 2007 quarter.
Similarly, the mutual fund holding in Chennai Petroleum was 2.04 per cent at the end of the March 2008 quarter compared to 1.7 per cent at the end of the December 2007 quarter.
In the case of oil marketing companies such as BPCL, the mutual fund holding was 4.38 per cent at the end of the March 2008 quarter as compared to 4.27 per cent at the end of the December 2007 quarter.
The operating environment for public sector companies has been difficult.
