Improving realisation on petroleum products, the likelihood of higher refining margins due to higher crude prices, and better marketing margins have rekindled investor interest in these stocks. The energy stocks inflow constituted 28% of the total inflow in the first half of June compared with 12% on the year-to-date (YTD) basis.
The share of energy stocks in the equity assets under management (AUM) of FPIs rose to 10% on June 15 compared with the six-month average of 9.7%. It had reached the peak of 13.8% in the middle of September 2020 before it troughed at 9.2% on January 15. The FPIs’ oil and gas AUM rose by 21.2% YTD to $61.1 billion (Rs 4.5 lakh crore).
FPIs hold nearly 25% of the stake in Reliance Industries, the country’s largest company by market capitalisation. Their holding in other energy stocks including BPCL and HPCL rose by 0.9% and 0.4% to 12.4% and 16.3% in March 2021 respectively, according to the BSE data.
Domestic funds have also increased exposure to oil and gas stocks after consistently pruning them between July 2020 and March 2021. Since then, The weight of these stocks in their portfolios increased by 20 basis points to 7.1% as of May 2021 according to the data compiled by
.
The Nifty Oil & Gas index has delivered a 28% return since the beginning of 2021, outperforming the benchmark Nifty 50 by 15%. The index trades at a 4% discount to its long-term average trailing priceearnings multiple of 13.3.
