Recommend short term trading on oil marketing companies: G Chokkalingam

In a chat with ET Now, G Chokkalingam, Founder, Equinomics Research & Advisory Pvt Ltd, shares his views on oil marketing companies:

ET Now: The oil marketing space right now, is it a decisive trade ahead of elections in anticipation of how maybe some of these companies with fuel subsidies being revised lower for the next financial year would benefit.

G Chokkalingam: Certainly, I would suggest only to play on short term from trading perspective on oil marketing companies because you would have already seen the fiscal deficit problem is there and lot of the subsidy for both oil marketing companies and fertiliser industry they are postponed to next fiscal and there are no signs of India getting relief on dollar demand.

The dollar squeeze is going to be a perennial issue for the country and therefore all these oil marketing companies will continuously see the problem and erode their cash balances on the balance sheet.

However, among all oil marketing companies I believe BPCL is better positioned because of the kind of oil and gas they found in Mozambique so one should play on all these companies only for short-term trading purpose, otherwise in the medium to long term they should not have any investment bias towards these.