Add OMCs on decline, says PN Vijay

PN Vijay, Portfolio Manager, www.askpnvijay.com advises traders to add OMCs on decline.

Vijay told CNBC-TV18, “Oil and gas is having something very fundamental in the sense that it is almost back to the old dismantling of administrative prices. If gradually the government allows the Oil marketing companies (OMCs) to come to market prices on diesel of course kerosene is still in a limbo that means that the oil marketers will benefit and also companies like Oil and Natural Gas Corporation (ONGC) which take 40 percent of that subsidy and which is their biggest hit on their profit and loss will also be benefitted.”
He further added, “In terms of relative valuations the price earnings of these is very attractive and also if you take the replacement cost of Hindustan Petroleum Corporation (HPCL) or Bharat Petroleum Corporation (BPCL) replacement cost to market cap is one of the ratios we use is just too much out of whack. So all those are very fundamental positives and I would suggest that on declines one could add to the OMCs because of their intrinsic monopolistic position and the fact that this could benefit the most.”