Big fall in crude oil is expected: There will be a bumper rise in shares of HPCL, BPCL and IOC, chance of profit up to 69%.

A very relieving news is coming from the global energy market for the Indian stock market and investors. There is a possibility of a big fall in the prices of crude oil i.e. Brent Crude in the international market. According to the latest estimates of market experts and global brokerage firms, Brent crude may slip to the level of $ 65 per barrel in the coming time. This possible fall in crude oil prices is going to prove to be a big game changer for Indian government oil marketing companies (OMCs). After this report came out, the eyes of investors have focused on the shares of Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and Indian Oil Corporation (IOC) in the domestic stock market, where huge returns are expected.

Why the price of crude oil can fall to $65

Many major economic reasons are being held responsible for this decline in crude oil prices globally. Due to economic slowdown in the world’s largest economies, especially China and America, there is a continuous decline in the demand for crude oil. Along with this, crude oil production in producers outside OPEC+ countries such as America, Brazil and Guyana has reached record levels. Due to this imbalance of high supply and weak demand in the market, commodity experts believe that Brent crude may touch the level of $65 very soon, which is a big boon for a big oil importing country like India.

Why will there be a bumper rise in the shares of HPCL, BPCL and IOC?

India imports about 85 percent of its crude oil requirement from abroad. In such a situation, whenever crude oil becomes cheaper in the international market, the government oil companies of the country benefit the most. Companies like HPCL, BPCL and IOC buy cheap crude oil from abroad, refine it and sell it in the domestic market. Due to cheap crude oil, both the refining margin (GRM) and marketing margin of these companies become very strong. Financial analysts estimate that due to improvement in margins, there will be a tremendous increase in the net profits of these companies, due to which their shares can see strong returns of up to 69 percent.

What does it mean for the general public and retail investors?

Not only the companies but also the general public of the country can directly benefit from the fall in crude oil. If crude oil prices remain around $65 for a long time, state oil companies will have an opportunity to reduce retail prices of petrol and diesel domestically. Due to cheaper fuel, the cost of freight transportation in the country will reduce, which will help in controlling the retail inflation rate. At the same time, this can be an excellent value buying opportunity for stock market investors, because the shares of these government companies are currently available with attractive valuations and good dividend yields.

What is the stance of brokerage houses on these oil stocks?

Leading brokerage houses have improved their ratings in view of the latest financial conditions of oil companies and the new outlook of crude oil. Experts say that among these three government oil companies, the shares of Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) may see the fastest recovery and growth, because their marketing network is very strong. However, considering the market risks, investors are being advised to keep an eye on the global geopolitical situation and the next decisions of OPEC countries, but the current trend seems to be completely in favor of Indian oil stocks.