Downside for most of oil stocks appears limited: ICICI Direct

Pankaj Pandey, Head of Research, ICICI Direct

On a fundamental basis given that there perhaps might be a change in stance as far as pricing of petrol is concerned and decontrol might be pretty much in the offing, would you look at oil companies right now?

What we have recommended in our year 2010 strategy is that oil as a sector could draw possible comfort from positive noises from the government though this deregulation thing has been going on and off for quite sometime but we feel that the downside for most of these stocks appears limited. If there are positive noises and the noises get louder, probably all these companies will benefit. We also draw a lot of comfort though the crude oil prices might be ranged going forward but refinery companies specifically based in the Asia region could do well because we are seeing a lot of refineries being shutdown in the Europe which again leads to better demand for some of the products which Asian companies would deliver. So in that sense, yes, things could improve for these companies going forward but then again, it will be more a contrarian call one has to take which is not really visible in the numbers at the moment.