Shares of oil marketing companies jumped in trade on March 31, 2020 in the range of 7-15% as crude oil prices fell to their lowest level since 2002, an 18-year low, on mounting fears that global lockdowns due to coronavirus pandemic can last for several months and fuel demand could fall further.
The decline in oil prices impacts oil and gas stocks positively as the gross refining margins of these companies improve in such a scenario.
Nifty Energy pack surged over 7% and hit an intra-day high of 11172.80 against its previous close of 10401.1 led by gains in BPCL which scaled higher by about 15%, HPCL up 14%, RIL up 9% and Indian Oil Corporation up over 7%.
Morgan Stanley, global research firm has included both Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) among its top picks. "We see significant tailwinds for refiners beyond the challenges of the shutdown. Hence we have overweight rating on IOC, BPCL and HPCL," said the global brokerage. Nonetheless, the lockdown would impact FY21 earnings by 6-9%, added the brokerage.