There is no real trading opportunity in oil and gas stocks: Vivek Mavani, Market Analyst

In a chat with ET Now, Vivek Mavani, Independent Market Analyst and Portfolio Manager, talks about he oil and gas space.

ET Now: What to do in 2013? Starting with what is happening today and some moves made in the oil and gas space in particular while the laboured price increase that has been announced, the likes of ONGC have made a move, what do you make of what has happened today?

Vivek Mavani: It is common knowledge that as far as the oil PSUs are concerned whether it is upstream or downstream, everybody shares the subsidy burden. The huge amount of subsidy burden estimate is about 1 lakh 75 thousand crores for the current year, hugely higher than what was budgeted earlier this year. Any move to reduce this subsidy burden which is a drag on the balance sheets of the oil PSUs is positive.

In the past two or three years, every time there has been a petrol or a diesel price increase or even more recently about sorting out the subsidy issue as far as LPG is concerned trying to cap the LPG subsidy in some form or the other, the oil PSUs have reacted positively. All of them have been trading moves and I do not see this beyond that because this only is one more attempt to probably control the subsidy but not solve the problem. It is more of a Band-Aid solution where a surgery is required as far as sector is concerned. There is no real trading opportunity from that point of view.