Israel-Iran War: A Financial Ripple Effect on Indian Oil Stocks Amid rising geopolitical tensions in the Middle East stemming from the ongoing Israel-Iran conflict, Indian oil stocks are experiencing a notable downturn. This situation is exacerbated by soaring crude oil prices and a weak Indian National Rupee (INR), which together undermine the purchasing power of Indian oil companies in the global market. Market analysts are warning of continued volatility in oil sector stocks listed on Dalal Street. Nevertheless, they suggest that these stocks may rebound quickly once Middle Eastern tensions ease, advising medium to long-term investors to capitalize on current low prices.
Impact of Rising Crude Oil Prices on Oil Stocks
VLA Ambala, a SEBI-registered Research Analyst and Co-Founder of Stock Market Today, commented on the declining momentum of the energy sector. He noted, “The energy market has seen a significant decline recently, and further corrections are likely as we navigate this tumultuous week. In contrast, crude oil prices demonstrated a 13% rise, driven by escalating tensions in the Middle East, particularly the Israel-Iran conflict. Such disruptions pose risks to global oil supply, particularly through critical routes like the Strait of Hormuz, which could exacerbate India’s fiscal challenges. The current market’s RSI reading indicates overbought conditions which could lead to more corrections. However, for investors, this ongoing conflict might provide valuable opportunities within the sector.”
Recommended Oil Stocks for Investment
As we approach Monday’s trading session, VLA Ambala suggests that investors consider accumulating the following five oil stocks: Gandhar Oil Refinery, Oil India Ltd, Petronet LNG, Bharat Petroleum Corporation Limited (BPCL), and Oil and Natural Gas Corporation (ONGC).
1. Gandhar Oil Refinery
Gandhar Oil Refinery: Currently, the stock appears to be poised for a breakout. With a price-to-earnings (PE) ratio of 16.04—below the sector average of 18.32—it is considered undervalued. Presently trading at ₹216, investors should look to buy within the range of ₹210 to ₹215, aspiring for target prices of ₹228, ₹235, and ₹250. Suggested holding period is between 1 to 8 weeks, with a stop loss at ₹200.
2. Oil India Limited
Oil India Limited: This state-owned company’s shares have surged by approximately 135% year-to-date. Despite a pullback from its August peak of ₹767.90 due to falling crude prices, the stock is stabilizing and beginning to gain momentum correlating with the rising crude oil prices amid geopolitical tensions. Investors should watch for a support level around ₹510 and target ranges of ₹665 to ₹680.
3. Petronet LNG
Petronet LNG: The stock’s current upward momentum is attractive for investment. A buying range of ₹340 to ₹350 is advisable, with target prices set between ₹370 and ₹430. Despite a slightly higher PE ratio of 13.11 in comparison to the sector at 12.38, it is still deemed worthy of a hold for 1-10 weeks, with a stop loss established at ₹310.
4. Bharat Petroleum Corporation Limited (BPCL)
BPCL: Currently trading at ₹340, BPCL could see further corrections. Investors might consider buying within the range of ₹290 to ₹310, while targeting ₹365 to ₹450. A holding period of 2 to 8 months is recommended with a stop loss order at ₹265.
5. Oil and Natural Gas Corporation (ONGC)
ONGC: The stock presents a promising mid-term opportunity, especially if a correction of 10-15% occurs. With a PE ratio of 8.33 versus the sector’s 17.11, it suggests favorable valuation. Aiming for a buying range between ₹255 and ₹276, investors might expect target prices of ₹310 to ₹370 while setting a stop loss at ₹240.
Disclaimer: The opinions and recommendations in this report reflect the views of the respective analysts or brokerages and do not necessarily represent those of our publication. Investors are encouraged to conduct their own research and consult certified professionals before making any investment decisions, as market conditions may change rapidly.
