The Hindu Business Line : OMC stocks turn active as crude price dips to 5-month low

Crude prices have scaled down to a five-month low of $63.97 a barrel in world markets. Bharat Petroleum traded at Rs 386.40, down 0.27 per cent, on the BSE today. Share prices of the company had appreciated by 26.52 per cent through August.

Hindustan Petroleum ended the day at Rs 305.40, up 0.13 per cent, on the BSE. Share prices of the company have been ruling steady over the past month, appreciating by about 37 per cent. Indian Oil Corporation closed the day at Rs 510.90, down by 0.79 per cent, on the BSE.

Reliance Petroleum ended the day at Rs 63.90, down 2.74 per cent. Trading volumes have been decent.

Crude prices have come down by $10 over the past two weeks, infusing life into stock prices of oil marketing companies. According to analysts, the fall is substantial considering that the Indian crude basket had touched a high of $76 a barrel in August 2006.

"Crude prices had gone up due to an escalation in demand and fears of a disruption in supplies due to the Israel-Lebanon conflict. The price fall should lift margins of oil marketing companies," said Mr Rajiv Thakker of Parag Parekh Financial Services.

Industry watchers are hoping to see some good times ahead with stocks of these companies seeing some consolidation.

"Fall in crude prices would automatically reduce the subsidy burden on oil marketing companies. Once the prices stabilise at such levels, it will slowly begin to reflect on the topline and bottomline of the company," said Mr Janish Shah, Head - Research, Networth Stock Broking Ltd.

"It is too early to comment on the effect of a drop in crude prices on stocks of oil marketing companies. We are safe, if crude prices hover around the current lows and rule normal in the coming days. Investors should wait for some more time before investing in oil stocks. However, if you have a good investible sum of money, there is no harm in holding 15 per cent oil stocks in your portfolio," said Mr Gaurang Shah of Geojit Financial Services.

Almost all market analysts rule out an immediate cut in domestic fuel prices.

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