Flattish Start to the Week; Oil & Gas Stocks Underperform

Mon, 16 Jan Closing

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The Indian share markets finished the day on positive note amid buying interest supported by realty and consumer durable stocks. IT, oil & gas stocks however finished the day in red. At the closing bell, the BSE Sensex closed higher by 50 points, whereas the NSE Nifty finished higher by 12 points. The S&P BSE Midcap ended up by 0.3%while the S&P BSE Small Cap finished up by 0.6%.

Asian markets finished lower as of the most recent closing prices. The Hang Seng was down 0.96%, while the Nikkei 225 led the Shanghai Composite lower. They fell 1.01% and 0.32% respectively. European markets are also trading in red. The FTSE 100 is lower by 0.05%, while France's CAC 40 is off 0.57%. Shares in Germany are down with the DAX at 11,568.70.

The rupee was trading at Rs 68.16 against the US$ in the afternoon session. Oil prices were trading at US$ 52.46 at the time of writing.

Energy stocks ended the day on a mixed note with Gulf Oil Lubricants and Hindustan Oil Exploration Co leading the gainers. According to an article in the Livemint, Hindustan Petroleum Corp. Ltd., (HPCL) is in talks with six foreign suppliers to source liquefied natural gas (LNG) for its Rs 54 billion LNG terminal coming up at the Chhara Port in Gujarat.

One must note that, HPCL has an equal joint venture agreement with Shapoorji Pallonji Port Pvt. Ltd to build the 5 million tonnes per annum (mtpa) LNG terminal at Chhara Port. The terminal is expected to be commissioned by 2019.

Reportedly, LNG aggregators and fleet operators such as BP Plc. and Royal Dutch Shell Plc., are among the companies providing access to spot natural gas to interested buyers. However, the names of six suppliers were not disclosed. Commissioning the terminal will help HPCL source LNG for its own refineries as well as to market natural gas for customers connected through gas pipelines.

HPCL is likely to market LNG cargoes of 60,000-70,000 metric tonnes. This will help the company establish itself in the gas business before it commissions its LNG terminal. According to Bloomberg, spot LNG prices for Singapore as on 3 January stood at US$9.062 per million British thermal unit (mBtu) against US$8.82 per mBtu, the reports noted.

HPCL share price ended the day flat.

In the meanwhile, as Indian government pushes ahead with a controversial plan to move the country away from physical cash, a group of researchers backed by RBI had called for an investigation into how block chain could achieve that goal. Blockchain is a public ledger that enables historical recording of all transactions that has occurred in a network in a way that it cannot be altered.

However, recently The Economic Times reported that the RBI's research arm has completed the first ever end-to-end test of the technology behind Bitcoin. The RBI's arm, Institute for Development and Research in Banking Technology (IDRBT), conducted the project using the technology behind Bitcoin in a trade application and roped in private and public sector banks, National Payments Corporation of India (NPCI) and took the help of IT majors such as Infosys, TCS and IBM Research to prepare the white paper.

The technology has huge scope in trade, banking, finance and revenue sectors. To give an analogy, if one applies for a home loan, it involves different arms within the banking system to process it, with each of them talking to one another. Moreover, Yes Bank announced their multi-nodal blockchain transaction feature not too long ago. Axis Bank became the nation's third lender to use blockchain technology for their operations.

Sharp Surge in Value of Bitcoins

For the full year 2016, Bitcoins were up by 121%. That made Bitcoin the best performing of all the asset classes in 2016.The RBI's new plan involves using blockchain technology to issue a digital rupee. A new report by the bank's research arm states how "the time is ripe" for blockchain technology adoption in the country. In one of our recent editions of The 5 Minute WrapUp, we have shared every bit of details about Bitcoins and the man who invented it. Don't miss reading this interesting piece.

Moreover, using the blockchain allows for India to become a cashless society. It remains unclear if new initiatives will be launched to push this technology into the mainstream in India.

And here's a note from Profit Hunter:

As we mentioned in an earlier note, the S&P BSE Oil & Gas index was among the best performers in 2016. It generated a 50% return, while the Nifty-50 index generated only 17% (both from February 2016 lows).

Today let's take a deeper look...at the oil marketing companies (OMCs), which are the components of this index - Bharat petroleum (BPCL), Indian Oil Corporation (IOC), and Hindustan Petroleum (HPCL), all of which are the major OMCs in India.

With S&P BSE Oil & Gas index generating such a phenomenal return, one stock among the OMCs that was very generous to its investors was HPCL. The stock generated over 128% returns in the corresponding period. While the other two, BPCL and IOC, generated only 75% and 93% respectively.

Being in the best sector and the best stock can generate exceptional returns. HPCL is one such example.

And that's the takeaway for today!

HPCL, the best performer among the OMCs

 

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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