The government is likely to give a nod to hike kerosene prices by 0.25 paise a litre per month till April 2017. If this comes through then the upstream oil companies like ONGC, Oil India will benefit.
S Naren, CIO at ICICI Prudential AMC, says at this point in time, a lot of cheap sectors/ stocks have near-term outlook constraints. Citing upstream oil companies as an example, he says they have very low margins today, but going ahead they will do very well.
In a move that will hit oil PSUs hard, the Finance Ministry wants changes in the way petrol and diesel are priced by suggesting excluding the element of import duties to save about Rs 18,000 crore in subsidy bills.
The government has hiked the contribution of upstream oil companies toward fuel subsidies to 38.8% for 2010-11 fiscal. In an interview with CNBC-TV18, SP Tulsian, sptulsian.com says, there is a lot of confusion. He is afraid that in FY12 this subsidy sharing by the upstream companies can rise from 38.7% may be to 40% plus.
Varatharajan Sivasankaran, VP-Research of Indiabulls Securities, in an interview with CNBC-TV18's Sonia Shenoy and Anuj Singhal, gave his perspective on the hurdles oil explorators may face in the wake of upstream subsidy burden.
Niraj Mansingka, VP of Institutional Equities from Research at Edelweiss Securities giving a stock specific view on the oil and gas sector in the wake of the upstream subsidy said, "Among the oil marketing companies and ONGC, I still prefer ONGC as a better bet."