Excise duty cut fails to offset oil marketing companies' losses amid rising crude prices: Nomura

AI Analysis

The Oil & Gas sector, particularly OMCs, is under pressure from global crude price volatility and domestic price controls. This news confirms that government intervention is not enough to protect their core marketing profitability.

Trading Insight

Maintain a bearish bias on OMCs; look for shorting opportunities on rallies, with strict stop-losses given potential for future government interventions.

Key Evidence

•Excise duty cut on petrol and diesel fails to offset losses for oil marketing companies.
•OMCs may continue to incur negative marketing margins.
•Rising crude oil prices and controlled retail fuel rates are negating the tax relief.
•Significant losses per litre are expected in key markets.
•Integrated operations offer some cushion, but core marketing remains under pressure.

Affected Stocks

IOCIndian Oil Corporation Ltd

Negative

Expected to incur negative marketing margins despite excise duty cut due to rising crude and controlled retail prices.

Sectors:Oil & Gas

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