Selloff sends HPCL, BPCL on roller-coaster

MUMBAI: The ongoing saga of the privatisation of Hindustan Petroleum and Bharat Petroleum has resulted in divergent results for different investors.
While speculators and other short-term investors are having a field day as these stocks show sharp fluctuations in their prices, for long-term investors there has not been nothing much to celebrate in the last six months.
A study by the ET Intelligence Group of the performance of oil sector PSUs in the six months since the end of February shows that except for BPCL and HPCL, most of the others have managed to record significant gains.
Analysts and technical chartists believe that the erratic movement of these scrips are due to the contradictory news that keep emerging on the disinvestments issue.
For several small investors, who have been holding the shares for the last six months, this has meant a loss of value of their investments as the data shows that HPCL and BPCL have lost 4 % and 3 % respectively during this period.
“Other PSU oil companies have not only recorded sharp rises but have even managed to consolidate their positions at higher levels by holding on to much of these gains,� says an analyst at a foreign brokerage firm.
Among the gainers ONGC has put up a sterling performance with a gain of 58 % since February end to close at Rs 353 on August 30.
The deregulation of the oil sector has led to increased confidence that additional gains are coming the company’s way due to higher crude prices, resulting in the scrip rising significantly.
Incidentally the company now has the highest market capitalisation on the bourses, at Rs 50,385 crore.
Indian Oil has seen it’s value move up from just Rs 166 at the end of February to Rs 243 now, a rise of 46%.
Among the reasons attributed by analysts for the gain are talk of the company selling off its cross holding in other companies like ONGC and GAIL along with an added thrust on retail marketing and exports.
The company also recorded a rise of 13 % in its first quarter net profits. Both BPCL and HPCL have fluctuated as contradictory news keeps emerging about the progress in the disinvestments process.
This has resulted in a fall being wiped out by gains a few days later and vice versa.
At the same time other refinery stocks like Kochi Refineries (40 %, CMP Rs 48), Bongaigaon Refineries (203 % CMP Rs 17) and Chennai Petroleum (29 % CMP Rs 29) too have shown a sharp upward movement during the last six months.