Israel-Iran war: Indian oil stocks came under selling pressure in weekend trading as tensions in the Middle East escalated due to the Israel-Iran war. Rising crude oil prices are also a reason why oil stocks are selling hot. Low trading levels of the Indian rupee (INR) also reduce the ability of Indian oil producers to buy power from global commodities. Stock market experts therefore predict that oil stocks listed on Dalal Street will fall further. However, they also said that the decline in oil stocks could signal a rapid recovery once tensions in the Middle East ease, and advised medium to long-term investors to buy oil stocks during the current decline.
Rising crude oil prices weigh on oil stocks
Commenting on how the Iran-Israel war is impacting Indian oil stocks, VLA Ambala, SEBI registered research analyst and co-founder of Stock Market Today, says, “The momentum in the energy sector has weakened significantly. , we expect further adjustments due to the notable economic downturn.” Meanwhile, oil prices have soared over the past week, with CRUDEOIL OCT FUT up 13%. This change was caused by escalating tensions in the Middle East, particularly threatening the Iranian Strait. Holmes. Further price increases could impact India’s fiscal deficit and worsen its economic challenges. Moreover, the low trading level of the rupee has reduced purchasing power and the market’s RSI reading above 81 suggests further correction from an investor’s perspective. The ongoing conflict between Israel and Iran could create opportunities for this sector, and for these stocks in particular. ”
Stocks to buy on Monday
Regarding oil stocks to buy on Monday, VLA Ambala recommended five stocks to buy: Gandhar Oil Refinery, Oil India Ltd, Petronet LNG, BPCL and ONGC.
1) Gandar Oil Refinery: “Current movements suggest a breakout period is near. Gandar’s current P/E of 16.04 is lower than its sectoral P/E of 18.32, making it undervalued. It is currently trading at ₹216, with investors tracking the target price of ₹228, ₹235 and ₹250 with a stop loss of ₹215 and a stop loss of ₹200 for 1-8 weeks. There is a possibility of holding it,” VLa Ambala said.
2) Oil India Limited: Sugandha Sachdeva, founder of SS Wealth Street, spoke on OIL stock and said, “Oil India stock price has seen a sharp correction from its August high of Rs 767.90. Despite the decline, it has risen about 135% year-to-date.” The upstream company’s stock price fell due to the sharp decline in oil prices in the third quarter of 2024. However, stock prices are currently showing signs of stabilization due to the sharp rise in oil prices due to the intensification of geopolitical factors. Middle East tensions. ”
He said oil prices rose about 10% after the outbreak of the Israel-Iran war, the biggest weekly increase in nearly two years. Given that the Middle East region accounts for almost a third of global oil production, markets remain nervous that an escalation of Middle East conflict could disrupt global oil supplies. As oil prices rise, state-owned oil and gas exploration company Oil India Ltd. could benefit from higher profit margins, which could help the stock price recover.
“Investors may consider accumulating in Oil India stock keeping an eye on the support level at the Rs 510 mark on a closing price basis. Looks like he is ready to test his goals,” Sugandha said. concluded.
3) Petronet LNG: “Current momentum in the stock price looks favorable for investment. Interested parties should position within the buy range of ₹340 to ₹350 against a target price of ₹370 to ₹430. However, the stock’s P/E ratio is 13.11, which is slightly higher than the sectoral P/E ratio of 12.38, so we recommend holding it for 1-10 weeks and setting a stop loss of ₹310. Ambara said.
4) BPCL: “Bharat Petroleum Corporation stock is currently trading at Rs 340, but its momentum points to the possibility of further correction. Those who want to tap into the potential can target the stock at Rs 310. You could consider buying it in the range of 290 rupees from .365-450. Investors can hold the units for two to eight months, but we will set a stop-loss order at ₹265 to manage risk,” Ambala added.
5) ONGC: “The stock looks promising in the medium term, especially after a correction of 10-15% expected. P/E of 8.33 versus sectoral P/E of 17.11 suggests attractive valuation Investors can consider a buy range of ₹276 and ₹255.”Target price is ₹310 to ₹370 with potential to hold for 1-6 months after setting stop loss order at ₹240. ” concluded VLA Ambala.
Disclaimer: The views and recommendations provided in this analysis are those of the individual analysts or brokerage firms and not of Mint. Because market conditions can change rapidly and individual circumstances may vary, investors are strongly encouraged to consult a certified professional before making any investment decisions.
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