Continuing on our posts on looking at new trends/sectors and themes. This is a post on Oil.
In our previous post we covered - NBFCs which have done really well, PSE momentum continues and Bottoming out of New Age Cos.
Oil is on a Boil
Brent Crude – Short term Breakout possible.
- 65-70 was the high in 2019-2020 before covid.
- Saw a spike to 130 in Russia Ukraine crisis.
- 85-90 before the Russia-Ukraine crisis.
- Formed a base with multiple bottoms around 70.
- Short term Breakout on cards
- Range could shift from 70-85 to 85-100 and stay at a higher range going forward.
ONGC
- Stock topped at 180-190 on the day Crude touched 130 !
- Was 155 when Windfall Tax got announced.
- Stock was at 180 even in 2006. Was the 2nd largest weight in Nifty at peak
- 10% away from an all time high on div adjusted charts.
- A 5-7 year breakout on dividend adjusted charts.
- Less than 3% of Equity with Public. Govt owns 59% + 10.3% with IOC and Gail. LIC owns 10%. ETFs own 3% Rest with FIIS+ DIIs.
ONGC Dividend Adjusted Chart - Monthly Chart
Disclosure – The author has a position and is biased. Please read the detailed Disclosure
Oil India – Nearing a breakout here too on div adjusted charts
Monthly Chart of Oil India - Dividend Adjusted
The other possible plays
Hindustan Oil Exploration - 10 year highs.
Hind Oil Exploration - Monhly Chart - Dividend Adjusted
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Selan Oil
Selan Exloration - Monthly Chart - Dividend Adjusted
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Lets see what has happened to some US based OIL and Gas players - All monthly charts
No Windfall Tax in the US companies. So most broke out post the Russia-Ukraine crisis.
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Conclusion
- Oil rally sparked a trend change in Oil and Refiners in US in 2022 itself as no Windfall Taxes.
- Given a higher base of Oil going forward, there could be a re-rating in Indian Oil Cos.
- Long-term Charts at a breakout after a long time.
- We do have an Indirect Beneficiary Stock recommended in our Technical Traders Club
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