Indian Oil, BPCL, HPCL shares gain up to 2% as HSBC bullish on OMCs amid oil price volatility

Shares of oil marketing companies (OMC) in Monday's trade (October 14) as the global brokerage HSBC remains optimistic on the outlook of these companies amid volatile oil prices.

Crude prices today fell amid lingering fears of deflation in China. Last in trade, brent crude traded at $78 per bbl, down over 1 per cent, while the WTI crude was also down over 1 per cent at nearly $75 per barrel.

At the time of writing this copy, shares of Indian Oil Corporation traded with gains of over 1 per cent at Rs 165, while Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation also were up 1.61 per cent and 1.66 per cent at Rs 343.2 and Rs 401.9 per share, respectively.

The brokerage cites that the current momentum in oil prices discourages any government interference in pump fuel prices. Also, the weakness in auto fuel price is  not surprising given above-normal monsoons. The brokerage further added that the strong marketing margins offset weakness in marketing GRMs.

Primarily, oil prices are witnessing heightened volatility amid geo-political uncertainities. There is a view by the brokerage that demand in oil remains muted in the country amid heavy rains.

Gasoline (MS) and diesel (HSD) weakness worries us less, it added.

Here's how global brokerage rates OMCs and their target price 
 
HSBC on IOCL (CMP: 163)
Maintain Buy ,Target 200
 
HSBC on Bharat Petroleum (CMP: 338)
Maintain Buy ,Target 460  
 
HSBC on Hindustan Petroleum (CMP: 395)
Maintain Buy , Target 480