Exploration cos more optimistic than oil marketing cos: BNP Paribas

Gaurang Shah, Asst VP, Geojit BNP Paribas Financial Services in an interview to ET NOW said that it is good news to hear that the government is planning to give some kind of gas compensation to oil marketing companies but the oil is not hunky-dory. As far as OMCs are concerned try and come out of it. I think exploration companies are something to go by like we were speaking of ONGC and Oil India. I think on a downtick it definitely make sense to get invested in them.

What would you do with the oil marketing companies. Would you buy into the strength or probably a flash in a pan sell at higher levels?

I think there is still under recovery problem both on terms of LPG, Kerosene, diesel its good to see crude at roundabout $70 a barrel mark which possibly helps the oil marketing companies but not for long. We feel that you have seen on the global scenario the crude has also sold off with the strength coming back into the dollar but we think the dollar cannot just go on with the kind of rally that you have seen and there will be downside tick on dollar and immediately you will see commodity price going up so that will have an impact on the oil marketing companies on the domestic arena.

Yes, it is good news to hear that the government is planning to give some kind of gas compensation to these oil marketing companies but the oil is not hunky-dory as far as OMCs are concerned try and come out of it I think exploration companies are something to go by like we were speaking of ONGC and Oil India. I think on a downtick it definitely make sense to get invested in them.

Cairn India is the other exploration stories that we track very closely and as a buy long term recommendations we have recommended Cairn India to our clients so we are quite optimistic about exploration companies rather than oil marketing companies.