IOC Stocks to Remain in Focus on Monday Amid Ongoing Market Trends

Petrol and Diesel Prices Hike for Third Time in Eight Days

Petrol and diesel prices were increased by 87-91 paise per litre on Saturday, marking the third price hike in eight days. This move pushes the cumulative rise in retail fuel prices to nearly ₹5 per litre in less than 10 days. The state-run oil companies have continued to pass on the impact of surging global crude oil prices.

The consecutive hikes come after an extended pause in retail fuel price revisions and are being driven by higher global crude oil prices, narrowing refining margins, and a weaker rupee, all of which have significantly increased import costs. The recent price hikes are likely to provide some relief to Oil Marketing Companies (OMCs) and help protect refining and marketing margins after they had been selling petrol, diesel, and LPG below cost for a prolonged period.

According to Sugandha Sachdeva, Founder of SS WealthStreet, despite the hikes, oil marketing companies are still estimated to be incurring losses on fuel sales due to elevated crude prices. However, crude oil prices have begun to cool off following the recent sharp rally, declining nearly 6% this month amid hopes of easing tensions between the US and Iran, along with expectations that a memorandum of understanding could eventually reopen the Strait of Hormuz and reduce supply disruptions.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Key Comparison of OMCs' Performance

The recent performance of OMCs has been strong, with all three companies delivering positive numbers this quarter. For conservative investors seeking stable returns and higher dividend yield, Indian Oil Corporation (IOC) appears to be the preferred choice due to its relatively attractive dividend profile.

Mahesh M Ojha, VP Research & Business Development at Kantilal Chhaganlal Securities, highlighted that from a value appreciation perspective, HPCL and BPCL also remain well placed, supported by improving operational performance and potential upside in valuations. IOC, in particular, has formed a strong base around the ₹130 zone, which continues to act as a key long-term support area on monthly charts and also coincides with important moving averages.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Sachdeva, while picking IOC as the top stock to buy, said that as long as the stock sustains above these levels, the broader outlook remains positive, with potential upside towards ₹155 levels initially, while a decisive breakout above the same could open the path towards ₹167 from a medium- to long-term perspective.