Sanjeev Prasad, Exec Director & Co Head, Kotak Institutional Equities is positive on oil sector. According to him, oil sector math is going to play a very big role in fiscal consolidation.
Prasad told CNBC-TV18, “We have been positive on the oil sector for some time. We have seen some progress as far as reforms are concerned in the sector. It is very important from market’s perspective because one of the themes which people will be focusing on, for the next few weeks leading up to the Budget is fiscal consolidation. Clearly, the oil sector math is going to play a very big role in that.”
He further said, “People wanted to believe that reforms will eventually happen in the sector because this has been a pretty much a very tough sector to implement reforms in. The government had announced diesel price deregulation as far as bulk diesel is concerned on January 17. It also announced the plan to raise twice as much small amount every month.”
“We have atleast seen one more round of price increase, so that will give more confidence to investors that the government actually means business as far as diesel price deregulation is concerned. Hopefully, over the next few months we will see some more evidence of that. So, from both - the fiscal consolidation perspective and the reforms momentum, this is a very positive development. An immediate impact may not be much but I think the sentiment impact is a lot more compared to the immediate earnings impact,” Prasad added.
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