Oil prices have been firming up recently with Brent at $84 a barrel – near its three-year high – led by a rebound in global demand that has contributed to energy shortages across various big countries such as China. While rising oil is bad news for India – a nimporter of crude – some oil explorers such as ONGC and Oil India have benefitted. Companies in the paints and aviation sectors among others, which use crude as a key input, have been hurt. ET takes a look at some of the gainers and losers and what’s in store in the near term.
CMP (Rs ): 163.65
Last 1-year Change (%): 136.8
ONGC is considered one of the biggest beneficiaries of rising energy prices as it has a dominant market position in the domestic crude oil and natural gas production business prices. Analysts said the stock, which is at a two-year high, is trading above all important technical moving averages. Rajesh Palviya, head-technicals and derivatives at Axis Securities said: “Rs 152 is the stop loss to go long on the stock for a target of Rs 175. If it crosses Rs 175 it can scale up to Rs 195-Rs 200 levels.”
CMP (Rs ): 234.95
Last 1-year Change (%): 167.6
Oil India, another major benefi-ciary of rising crude, has given a breakout after the recent rally and could rise as much as 27%. “Looking at the set-up, one can buy at current levels with a stop loss of Rs 220 for a target of Rs 260,” said Palviya. If it crosses Rs 260 it can rise further to Rs 300, he said.
CMP (Rs ): 2,668.55
Last 1-year Change (%): 19.3
Shares of the oil-to-telecom conglomerate could gain as much as 12% from current levels if crude oil prices remain elevated. “They are more in control of inventory and GRMs will expand on rising crude oil prices. I don’t rule out Rs 2,850 to Rs 3,000 on Reliance Industries,” said Sanjiv Bhasin
CMP (Rs ): 3,322.75
Last 1-year Change (%): 60
Asian Paints shares could come under pressure as crude oil and its derivatives account for about half of paint companies’ costs. “Paint companies have exposure to crude prices but in the past two years, water-based paint category exposure has increased. Also, they have taken three rounds of price hikes. Still, there will be some pressure,” said Abneesh Roy, vice president-institutional Equities at Edelweiss. He expects the impact of higher crude prices to be felt on margins over the next couple of quarters.
CMP (Rs ): 2,039.85
Last 1-year Change (%): 47.8
For airlines, oil is the biggest input and rising prices hit profitability the most. Analysts said the government restoring scheduled domestic operations from October 18 will help aviation companies ease the impact of rising crude prices. ” If demand picks up, it is easier to impact cost increases,” said Jyotivardhan Jaipuria, founder, Valentis Advisors.
CMP (Rs ): 821.25
Last 1-year Change (%): 34.9
Upside in Berger could be capped as investors could question rich valuations amid margin pressure. Chandan Taparia, derivatives analyst at Motilal Oswal, said the stock could still touch Rs 872 on technical strength if holds above support of Rs 785.