Oil sector outlook dim this year: Angel Stock Broking

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Oil sector outlook dim this year: Angel Stock Broking

Focusing on the oil and gas segment, Rohit Nagraj of Angel Stock Broking puts things into perspective on this counter. As a house, he says that they are neutral towards oil marketing companies for the time being. He says that the oil space looks dim for the year.

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Excerpts from Your Stocks on CNBC-TV18 Watch the full show » RELATED NEWS Crude prices likely to rise ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Hindustan Petroleum Corporation | Indian Oil Corporation |

Focusing on the oil and gas segment, Rohit Nagraj of Angel Stock Broking puts things into perspective on this counter. As a house, he says that they are neutral towards oil marketing companies for the time being. He says that outlook for the oil space looks dim for the year.

Excerpts from CNBC - TV18's exclusive interview with Rohit Nagraj:

Q: How do you think this entire oil bond issue will actually play out and come February when it does come into effect or atleast the rumours say so, do you think the margin picture for oil and gas space as a whole will actually ease out?

A: It is difficult to say that right now because we feel that there is too much government intervention in terms of clarity on oil bonds and then the subsidy issue. Recently the government reduced the prices of retail fuel and that still hampers the oil marketing companies a lot.

So I don't think the oil marketing companies will come out of this red until and unless the government thinks so.

Q: How is that entire issue actually playing out - do you think that has actually taken its toll on marketing margins and which companies do you see most effected by this?

A: The marketing margins have been affected and we think all the three oil-marketing companies have been affected because of this. The most hit has been taken by HPCL and BPCL whereas IOC , because of its volumes play, is not hit that much.

But overall this space looks dim for the year until and unless government takes some firm steps to stay away from the subsidies and burden on these oil marketing companies.

Q: Too many factors playing out for this one particular space. How safe an investment bet does it make for an investor to actually buy either the oil marketing companies or refining companies stocks?

A: In terms of crude, the uncertainty has is over because this year we feel that the oil prices should hover between USD 55-65 and most likely around USD 60.

So that is one factor that has been phased out. But the government intervention is too much and that is what the worrisome factor for all the oil-marketing companies is. If you take our view, we are neutral on all the oil marketing companies as of now.