Oil marketing companies drag

Oil Marketing companies were out performing the main index. The major OMCs like BPCL, HPCL IOC, ONGC increased 30-35% during last 3 months period where as NSE Nifty only rose 8-9%. OMCs where the out performers for the last quarter. The main reason for this confidence is consistent diesel price increase. Government also initiated de regulation of diesel prices. This confidence started coming down after a doubt whether the increased subsidy burden will seriously impact the revenues of these companies. If Government is not compensating the huge under covering cost, These companies will need to go for borrowing. This will make a huge interest burden and take away most part of their revenue. Rationale for selling ONGC , IOC, and other OMC 1.Depreciating rupee against dollar 2.Import of oil may increase after the election if stable government comes in power. Current account deficit may increase and thus again chance for Rupee devaluation arise thus making under performance in OMC sector. 3.IOC, HPCL and BPCL together projected a 1,41,000 crore lose of revenue because of subsidy.