🛢️ Indian Oil Corporation 🛢️
How a cut 🔽 in excise duty on petrol and diesel 🛢️ will affect the stock?
Fundamentals:📈
❧ The Centre cut the excise duty on petrol and diesel which will reduce the petrol prices by around Rs.9 while diesel by around Rs.7.🔽
❧ Today, the Maharashtra government announced the reduction in petrol prices by Rs.2.08 and diesel by Rs.1.44.🔽
❧ Kerala and Rajasthan also slashed the VAT on Petrol and Diesel.🛢️
❧ Generally, OMC (Oil Marketing Companies) change the petrol prices on a daily basis based on the rolling average of 15 days of the international benchmarks.
❧ But they have not changed the oil prices for the last 137 days despite a stiff increase in the crude oil prices in early March.📈
❧ This will lead to a reduction to excise collection by the centre by 1 lakh crore a year.
❧ Decisions not to increase the fuel prices have been reflected in the quarterly results of OMCs🛢️
❧ IOC reported a drop of 31% in the net profit due to a decline in margins especially due to auto fuel sales.🔽
❧ Board declared bonus shares in the ratio of 1:2.
❧ They also declared a dividend of Rs.3.60 (pre bonus)📈
❧ Now, It will depend on the OMCs 🛢️ and their action whether they will increase the prices to compensate for the losses in the previous quarter or will continue to take the pressure of lesser margins.
❧ The actions of OMCs🛢️ will be important to identifying the trend of fuel prices in India.📈
Technicals:📈
❧ Charts of IOC are weak and had seen a continuous sell-off last few trading sessions.
❧ Stock is also moving below its 200 EMA and 50 DMA levels which is not a positive sign.
❧ Longs can only be initiated after breaking the down trendline based on the volumes and strength in the momentum.
❧ More sell-off can be expected in the stock below 114 levels
❧ RSI at 37 shows the weakness in the trend.
For Trading:📈
Short Selling can be done below 114.20
Target: 110.60
Stop Loss: 118.75
Disclaimer: The information mentioned above is only for educational purposes. Kindly contact your financial advisor before trading/investing 💰
Please post your views/queries in the comments below. 👇
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