Back

Equity Futures: Bullish bets in upstream oil cos as crude prices fall

Informist, Monday, Nov 28, 2022

 

By Vaibhavi

 

MUMBAI – Traders aggressively bought futures and options of upstream oil companies today, anticipating more gains in these counters, as a drop in Brent crude oil prices eased pressure on their profitability.

 

Brent crude futures slumped to an over 10-month low of around $81 per barrel as surging COVID-19 cases in China and the consequent stringent restrictions dented the outlook on demand from the world's second-largest oil importer. However, the fall in oil prices came as a blessing for domestic upstream companies, as it will ease their input costs and give them more headroom to command prices in the domestic market.

 

For the past few quarters, upstream oil companies have struggled in terms of margins, as the war in Ukraine pushed oil prices to multi-year highs. As India imports much of the oil to meet its fuel requirements, a fall in global prices of the commodity will ease input costs for domestic upstream companies.

 

Buoyed by the sentiment, shares of Bharat Petroleum Corp and Hindustan Petroleum Corp hit two-month highs in the cash market, while those of Indian Oil Corp rose to their highest in over four months.

 

Bullish sentiment also spread across the futures segment of these stocks, as traders aggressively added long positions in the December futures contracts of Bharat Petroleum Corp, Indian Oil Corp and Hindustan Petroleum Corp. Open interest in the December futures contracts of all the three stocks jumped 4-8%.

 

Strong buying was witnessed across higher out-of-the-money strike prices of the three stocks, hinting that traders anticipate more gains in these counters.

 

All the three stocks have witnessed strong momentum, and have bottomed out after their underperformance in the last few months, said Rajesh Bhosale, technical and derivative analyst at Angel One. "Going by the positions in the derivatives segment, we expect to see further upside in these counters. While BPCL is likely to hit 360-rupee mark, IOCL and HPCL are expected to move higher towards 81 rupees and 250 rupees, respectively," Bhosale said.

 

Foreseeing more gains, Bhosale also suggested that investors use dips in BPCL, IOCL and HPCL towards 332 rupees, 74 rupees, and 231 rupees, respectively, to take fresh long positions.

 

Today, shares of Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp ended 4-6% higher.

 

As for the Nifty 50, the index shrugged off early jitters and hit a fresh lifetime high of 18614.25 points in the cash market today. It also ended at a record closing high of 18562.75 points, up 0.3% from the previous close.

 

Analysts expect the uptrend for the Nifty 50 to take it higher towards 19000 points, though bouts of profit booking may emerge. As the momentum for the headline index remains strong, analysts recommend that investors add fresh long positions at intraday declines towards 18400-18500 points.

 

–Nifty 50 Dec closed at 18690.00, up 43.90 points; 127.25-point premium to spot index

–Nifty 50 Jan closed at 18796.00, up 44.10 points; 233.25-point premium to spot index

–Nifty 50 Fed closed at 18880.00, up 37.70 points; 317.25-point premium to spot index

 

The total turnover in the futures and options segment of the National Stock Exchange was 102.27 trln rupees, against 95.55 trln rupees on Friday.

 

The turnover in index options was 99.64 trln rupees, compared with 92.77 trln rupees in the previous session. The total premium turnover of index and stock options stood at 357.7 bln rupees, compared with 393.13 bln rupees on Friday.

 

ICICI Bank, Apollo Tyres, Bharat Heavy Electricals, Tata Motors, HDFC Bank, Adani Enterprises, Infosys, Reliance Industries, Axis Bank, and State Bank of India were among the most actively traded underlying stocks.  End

 

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2022. All rights reserved.

Other News

Informist Poll: Gold may struggle in Feb as focus on Fed rate hikes

Informist, Tuesday, Feb 7, 2023 By Sayantan Sarkar MUMBAI – After starting the year strong, gold prices may struggle to maintain the momentum in February due to the dollar's appreciation against major currencies and worries that the US Federal Reserve will continue to increase rates in the future. In the domestic market, the rupee's depreciation against the dollar […]

India Gilts Review: End tad up as OIS rates fall; MPC outcome eyed

Informist, Tuesday, Feb 7, 2023 By Anjali and Kasthuri Akhil MUMBAI/NEW DELHI – Government bond prices ended slightly up tracking a fall in overnight indexed swap rates, dealers said. Meanwhile, traders maintained caution ahead of the central bank's monetary policy decision due Wednesday, which limiting the gains. The 10-year benchmark 7.26%, 2032 bond ended at 99.66 rupees, or 7.31% yield, against 99.59 rupees, or 7.32% […]

INTERVIEW:Consumer affairs secy sees food price mostly stable this yr

Informist, Tuesday, Feb 7, 2023 –Consumer affairs secy: See vegetables, pulses prices stable this year–Expect wheat prices to fall further–Will procure tur over MSP via e-auction–NAFED to procure 250,000 tn onion in FY24 too–Expect onion crop to be bumper 2023-24–NAFED to continue procurement of pulses–Imported tur procurement halt only temporary–To procure tur, urad irrespective of MSP By Arunima […]