Post petrol hike, should you buy BPCL, HPCL, IOC?
The move is a silver lining for companies as their losses on selling petrol had been increasing because of the rupee's recent depreciation.
State-owned oil marketing companies have some thing to cheer for as the government has allowed them to raise the price of petrol by a steep Rs 7.50 or so per litre. While the move will cause enough angst to the common man, it's a silver lining for companies as their losses on selling petrol had been increasing because of the rupee's recent depreciation.
On Thursday, the oil and gas index was the top sector index gainer, led by stocks like BPCL (2 percent), HPCL (1.3 percent), IOC (1.6 percent). So, does the petrol price change the sentiment on these stocks? Should investors buy them or book profits?
Ambareesh Baliga, chief operating officer of Way2Wealth, says that while these stocks could see a bounce of about 4-5 percent, investors should take profits. He further added that people should realise that, fundamentally, nothing much is going to change for these companies as long as the subsidy scheme exists as the real valuation of these companies will remain locked.
And this may very much be true. In an interview with CNBC TV-18, RK Singh, chairman and managing director of BPCL, said that this hike will be enough to recover only current losses and not those made in the past. In fact, he went a step further to say that they would like to have a price revision every fortnight.
If that happens, expect Mamata Di to be one angry sister.