There was a big fall in the shares of oil and gas sector on Thursday amid uncertainty over the prices of petrol and diesel in the domestic market and fluctuations in the prices of crude oil. Shares of many major companies from HPCL, BPCL to IGL came under pressure due to investors’ concerns about profit booking and future cost-income structure.
According to stock market experts, the fear of increase in prices of petrol and diesel and instability in the global energy market have affected the sentiment of investors in this sector. This had a direct impact on the shares of government oil marketing companies (OMCs) and gas distribution companies.
Major stocks like Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) witnessed weakness in early trade. At the same time, shares of Indraprastha Gas Limited (IGL) and other city gas distribution companies also declined.
Market analysts say that the increase in prices of petrol and diesel can have an impact on both consumer demand and government policies. Along with this, volatility in international crude oil prices is making investors cautious, due to which selling pressure has increased in this sector.
According to experts, the profits of oil marketing companies largely depend on the balance between global crude oil prices and domestic retail rates. If crude oil prices rise and retail prices do not adjust proportionately, companies’ margins may be impacted.
However, some investment advisors believe that this decline may be temporary and demand in the energy sector is likely to remain stable in the long run. He says that energy consumption is continuously increasing in a developing country like India, due to which there will be opportunities for long-term investment in this sector.
At present, there is an environment of volatility in the market and investors are keeping an eye on global signals as well as domestic policy decisions. In the coming days, the future direction of this sector is likely to be decided based on oil prices and government decisions.
