Stock Market Today: The Nifty Oil & Gas index gained up to 2.5% during the intraday trade on Friday, September 27. Oil marketing companies (OMCs) such as Bharat Petroleum Corporation Ltd (BPCL),
Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation ( IOCL) rose up to 7% and were the lead gainers. BPCL share price also scaled its one-year high and was the top gainer among Nifty50 stocks.Gujarat Gas, Petronet LNG, Gujarat State Petronet, and GAIL (India) were other key gainers in the index.
Lower crude oil prices improve outlookThe decline in crude oil prices lead the gains for oil marketing companies Brent crude prices, which were close to $90 per barrel and even higher in April 2024, are now trading near $70 per barrel levels. Notably, crude prices have fallen by roughly 8% during the last week.
Lower crude prices have a positive impact on OMC marketing profitability. Marketing margins are the earnings that these corporations get from selling motor fuel at their outlets, and decreasing crude oil costs benefit these margins.
Analysts maintain positive outlook for BPCL, HPCL, IOCLAgainst the backdrop of weak crude oil prices and a range-bound refining GRM environment, the outlook for marketing margins remains strong, said analysts at Motilal Oswal Financial Services
Also, they added that OMCs appear to be trading at the higher end of the historical range, with Street’s earnings estimates at only ₹3-4 per litre marketing margins while current margins are above ₹10 a litre