Market experts said the strong demand and supply-side constraints are leading to a rally in commodity prices. In Tuesday’s morning trade, BSE Oil & Gas Index soared 3 per cent to Rs 18,930, before slipping some bit to trade at 18,858 at 11.15 am.
Among the index constituents, ONGC gained over 8 per cent to Rs 159.75, while GAIL (India) advanced 4 per cent to Rs 168.30. Petronet LNG was the only energy player, trading in the red, down 2 per cent at Rs 231.75.
Oil marketing companies including Indian Oil, Hindustan Petroleum Corporation, Bharat Petroleum rose 2-3 per cent each. Reliance Industries and Indraprastha Gas also rose marginally.
MRPL surged 7 per cent to Rs 53.85, whereas Gujarat Gas rose 5 per cent to Rs 638.25. Adani Total Gas, Hindustan Oil Exploration and Mahanagar Gas rose 3 per cent each.
OPEC has stuck to its plan to gradually resume production, making it likely that oil supply will remain in deficit for the next few months.
Likhita Chepa, Senior Research Analyst at CapitalVia Global Research, said the supply/capacity control makes Opec+ the only player that can significantly redirect market conditions.
The spike in energy prices has triggered concerns over inflation.
Santosh Meena, Head of Research, Swastika Investmart said earlier central banks were saying inflation is transitory, but the current situation is looking different. “Inflation may now trigger the first meaningful correction in the stock market. Investors should have some commodity stocks in their portfolios to hedge themselves with inflation risk,” he said.
The gas price hike trigger may be limited to the short term, but it will negatively impact the sectors dependent on natural gas like power and fertilisers, said Chepa.
Some analysts said while gas stocks can be a tactical play in the short to medium terms, oil exploration companies, power companies, chemical stocks and sugar stocks may outperform.
According to Chepa, ONGC, India’s largest domestic gas producer, could be the biggest beneficiary, if global prices remain at the current level for the next 3-4 months. She has also picked Oil India.
Apart from ONGC and Oil India, Meena has also picked Vedanta to ride the rally in both crude oil and metal prices. Besides, he picked Balrampur Chini, Triveni engineering, Aarti Industries, SRF and Deepak Nitrite as good options to risk off the price rise.
