OMC stocks likely to remain range-bound: Dipan Mehta

In a chat with ET Now, Dipan Mehta, Member BSE and NSE, shares his stocks ideas.

Is it safe to just stay out completely from oil marketing companies?

At present, oil marketing companies have all been converted into utilities whereby they are more or less assured a kind of a fixed return on their investment or fixed profit margin or more or less stable set of profits. In a way they do not get benefit of any upsides or downsides in the oil prices. At the time of oil prices going up, the government is certainly stepping in by providing them with excess subsidy. So, unless there is a major overhaul of the entire oil pricing mechanism and government's approach towards subsidy sharing, these companies will remain completely range bound because the government has come to the rescue of the oil marketing companies and prevented them from bleeding completely. So, these are businesses where profits are determined totally on government action or inaction, and that's not a very happy situation from a minority investor point of view. So, unless we see some major change of policy or about-turn from the government, these companies will remain very low on the radar for most investors.