Traders mount bearish bets on oil & gas stocks

Traders are betting on a recovery in the market in the July derivatives series after three months of losses. They, however, are not so optimistic on oil & gas stocks that are among the biggest laggards so far in the current series due to the announcement of export taxes and restrictions on petrol and diesel exports. ET takes a look at some of the top trading bets of the July F&O series.

Cummins India
CMP: Rs 1,130.25
OI Change*: 38.55%
Share Price Change*: 10.35%


A technical breakout has made Cummins India an attractive bet. “The stock has given a consolidation breakout and can more towards Rs 1,180. One can buy at the current levels with a stop loss of Rs 1,100,” said Chandan Taparia, derivatives analyst at Motilal Oswal.

Indian Oil
CMP: Rs 72.70
OI Change: 21.82%
Share Price Change: -2.09%

Weakness in the oil and gas space has had a ruboff effect on Indian Oil (IOC) shares as well, said analysts. “The structure overall is weak and support is at Rs 68. However, if the market recovery continues, then the stock may bounce back to Rs 80,” said Taparia. He advises exiting the stock on a bounce-back.


ONGC
CMP: Rs 123.50
OI Change: 57.05%
Share Price Change: -18.51%

The stock has seen a buildup of bearish bets after the government announced export taxes and imposed restrictions on exports of petrol, diesel and jet fuel. “There is short build-up according to data. ONGC is in an oversold zone but the structure is weak and the stock can go to Rs 110 if it continues to trade below Rs 130,” said Rajesh Palviya, head - technicals and derivatives at Axis Securities.

SRF
CMP: Rs 2,072
OI Change: 38.55%
Share Price Change: 10.35%

Analysts attributed the bearish bets to market talk that the US may roll back some tariffs on Chinese consumer goods. Any reduction or removal in anti-dumping measures on HFC will impact prices which is reflected in the company’s margins, said analysts. “The stock is trading near the critical level of Rs 2,100; if it sustains below that then it may fall to Rs 1,850,” said Palviya. Taparia of Motilal Oswal said SRF shares may fall to Rs 1,950.


Reliance Industries
CMP: Rs 2,388.10
OI Change: 15.38
Share Price Change: -8

Like ONGC, Reliance Industries has been seeing a weak run on the bourses due to export taxes and restrictions on petrol, diesel and jet fuel. “The stock is trading near its critical support of Rs 2,380 and if that’s broken, it may go down to Rs 2,280-2,300. The near-term structure is looking weak. Rs 2,450 is the immediate hurdle and some short covering may be seen if it sustains above that level,” said Palviya.