BPCL is poised for a major upside; here's why

Mumbai: The stock of Bharat Petroleum Corporation Ltd (BPCL), which moved above the 200-day double exponential moving average (DEMA) on Friday, is poised for a major upside with disinvestment on the cards, analysts said.Shares ended the day at Rs 394 after trending higher and forming higher highs on a daily scale during the past seven trading sessions.“The stock has seen 92% rollover with increase in the grip of Put writers over Call writers, but the overall trend is positive as it closed above its 200-day DEMA,” said Chandan Taparia, technical analyst at Motilal Oswal Financial Services.“Overall buying interest is visible in oil marketing companies, thus maintaining our positive stance and advising traders to buy the stock for an up-move towards Rs 420 with stop-loss of Rs 382,” he said.BPCL’s stock price is, however, down 6% over the last three months compared to a 12% gain for the Nifty.The underperformance is partly driven by continued extensions in the submission date for Expression of Interest (EoI) to pick up the government’s stake in its disinvestment process. The final deadline for submission of EoI is November 16.The Bombay High Court on Thursday dismissed a Public Interest Litigation (PIL) that had challenged the government’s move and upheld a decision of the Cabinet Committee on Economic Affairs (CCEA) to grant in-principle approval for the disinvestment.“The earnings environment remains lacklustre for refining, but the stock should move more on how the bids come through, not on underlying refining or marketing margins,” said Pinakin Parekh, analyst at JP Morgan, providing a target price of Rs 525 for the stock by June next year.“With the removal of the dividend distribution tax recently and the earlier reduction of the corporate tax, cash flows to foreign strategic buyers have effectively increased, making BPCL more attractive,” he added.

from Economic Times https://ift.tt/3kyzmvk