Avoid HPCL, BPCL, says Gautam Chhaochharia

Avoid HPCL and BPCL, says Gautam Chhaochharia, UBS India.

Chhaochharia told CNBC-TV18, "Our view is that the fuel price mechanism is still likely to be in steps rather than a clear path ahead. There has been talk that you could see almost a rupee kind of a hike every month ahead. However, I think in the current inflationary environment it will still be difficult for the government. You are more likely see another hike happening sooner maybe through this cabinet committee meeting, but it maybe just Re 1 or Rs 2 hike. It is unlikely to be a big hike."
"For the entire space, we still prefer the upstream guys Cairn India specifically and Oil & Natural Gas Corporation (ONGC) rather than the downstream Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) variety."
"We have seen this kind of talk and scenario play out for that complex many number of times over the last decade. You could have a trading move up again this time for HPCL, BPCL etc but for that to sustain and therefore for us to be fundamentally bullish, I think we do not have the comfort of the inflation environment around us to be convinced on that. So we still avoid them."