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Investors were seen rushing to own stocks in the oil&gas sector as cheaper valuations make these stocks attractive. Most of the stocks in the oil and gas sector had seen a steep fall in the last one-month period due to the rupee depreciation.
“All stocks in this sector have corrected significantly in the last three weeks as the rupee depreciated aggravating worries about higher under-recoveries in these companies. Many investors had cut down their positions,” said an analyst with Emkay Global Financial Services.
“At current valuations, however, these stocks look attractive. Investors were seen dumping stocks in other sectors and shifting to this sector from a long-term perspective,” the analyst added.
Share prices of energy sector stocks on average were up by about 2% on Wednesday, when the broader market indices were trading flat. On Wednesday, the BSE oil&gas index was up about 1.3% led by rise in stocks like Oil India, BPCL and IOC among others. On the other hand, the BSE Sensex was up 0.5% and trading at 19332.The NSE Nifty was up 0.6% to trade at 5734.
Among the index stocks, Oil India (OIL) was the highest performer up about 4.3% followed by BPCL which was up 3% and Indian Oil Corporation (IOC) which was up 2.9%
Market participants said that in the last few days heavy buying was seen in stocks like IOC, BPCL, HPCL, OIL, ONGC, Gujarat Gas, GSPL and Petronet. This was despite the poor earnings show by companies like ONGC, IOC and OIL, they added. Gujarat Gas, which is not part of the index, has moved up by 39% in the last one week.
Going ahead, the sector is likely to benefit from the pricing reforms introduced by the government earlier this year and continued steps in that direction like hiking diesel prices, market-men said. A correction in the rupee is also likely to help this sector, they said.
Further decline in the rupee, analysts said had already been factored in. But a fall to Rs 64-levels could reverse the buying-trend in these stocks, they added. Analysts expect the rupee to correct to Rs 55-levels to the dollar by the end of the year.
| BSE Oil & Gas Index | Last Traded Price | Absolute Change | Change (%) |
| OIL INDIA | 494.4 | 20.35 | 4.29 |
| BPCL | 294.35 | 8.4 | 2.94 |
| Indian Oil Corp | 206.9 | 5.8 | 2.88 |
| Cairn India | 305.25 | 7.1 | 2.38 |
| Petronet LNG | 126.4 | 2.8 | 2.27 |
| Gail India | 314 | 6.7 | 2.18 |
| ONGC | 278.75 | 3.8 | 1.38 |
| RIL | 857.25 | 4.9 | 0.57 |
| Castrol India | 319.4 | -0.35 | -0.11 |
| HPCL | 186.6 | -3.35 | -1.76 |
| Source: BSE |
