IOC, BPCL, HPCL slipped on Moody's view

NEW DELHI: Shares of Indian Oil Corporation, Bharat Petroleum ( BPCL) and Hindustan Petroleum ( HPCL) sipped 2-5% in trade on Wednesday after Moody’s investor service said in a report that a sharp decline in rupee exerts pressure on oil marketing companies.

"Energy constitutes the largest portion of India's import bill, and IOC, together with the other unrated Indian refining and marketing companies BPCL and HPCL, which import oil to supplement their small amounts of domestic production, have the most direct exposure to a weaker local currency," says Alan Greene, Vice President and Senior Credit Officer at Moody's, in a report.

The rupee which has depreciated 15-20% so far in 2011 touched a new low of Rs 53.75 on Wednesday versus dollar, weighed down by slowdown in India economy and European debt crisis.

At 03:00 p.m., shares of BPCL were trading 5.7% lower at Rs 510, IOC slipped 2.2% to trade at Rs 269.50 and HPCL dropped 4.3% to Rs 277.50.

Analyst Call: Vijay Bhambwani, Author, CEO, BSPLindia.com

Let's take the pure oil marketing company plays first, HP, BPCL and IOC. Of these, BPCL and HPCL might fall as compared to IOC. Although it appears weak on the charts and is resisting a precipitous decline in the absolute near term but is definitely a short sell.

As far as Reliance is concerned, Reliance is also facing tremendous amount of pressure. Levels of Rs 720-725 band is what I would watch out for. If that is breached, Reliance is into a very bad time then. The stock may even go all the way to Rs 660 or Rs 680.