Fall in commodity prices, divestment to put pressure on CIL, OMC stocks: Ajay Bodke

In a chat with ET Now, Ajay Bodke, Prabhudas Lilladher, talks about the OMC space and how to approach the government's divestment drive.

ET Now: If there was a semblance of a rally into a Coal India ( CIL), into OMCs like IOC, etc, divestment news will ensure that these rallies get thwarted. How should the market approach some of these divestment candidates even if they are doing well?

Ajay Bodke: I tend to agree with you. The government had set a very stiff target of around 69,500 crores for divestment; we are already in the month of August and only 3000 crores roughly have been raised. Therefore, the pressure to ensure that the target is reached in full, unlike last year when there was a large deficiency, will be there and that is why we are expecting a flurry of issuances now from the government from some of the blue chip companies. However, the supply will ensure that there is a cap in terms of the upside and especially in the case of the resources sector the environment is not too conducive. There are a lot of headwinds, commodity prices are under tremendous pressure globally, that would also weigh upon the performance of some of the resources companies which the government might want to divest. Therefore, that is something that the government will have to be cognizant of.