In a problem of plenty for refinery stocks, huge investor demand due to soaring oil prices has led to futures trading being banned in three such securities — Mukesh Ambani group’s Reliance Petroleum, Ruias-promoted Essar Oil and state-run Bongaigaon Refinery.
According to a circular issued by the National Stock Exchange, RPL, Essar Oil and Indian Oil’s subsidiary BRL are among the eight securities where derivative contracts have crossed 95 per cent of market-wide position limit and any fresh position has been banned in these contracts.
“Oil stocks are giving good returns amid global crude prices reaching high levels, thus leading to investors increasing their exposure to these counters,” New Delhi-based brokerage house SMC Global Vice President Rajesh Jain said.
“Besides, the investors are seeking to continue holding on their positions for long and are not squaring off their exposure, thus leading to the 95 per cent market-wide position limit,” Jain added.
“The huge turnover in the futures of oil refining firms is due to long-term profits which the investors expect these firms will make. The expectations have gone up due to rise in global oil prices and the rupee appreciation that would boost the export of refined oil,” said a broker.
In the cash segment as well, oil-refining firms have been performing well and witnessed record turnover in their scrips.
RPL shares have been seeing huge turnover in both cash and derivatives segment over the past few days. Derivatives trading was banned soon after it resumed trading on Monday after a previous ban.
In the cash segment, Reliance Petroleum has been the top traded stock on the bourses. RPL has witnessed a turnover of Rs 203.54 crore in afternoon trade at the BSE on Wednesday.
Essar Oil witnessed a whopping jump of over 312.55 per cent in a month in the cash segment. From the levels of Rs 53.75 quoted on October 26, the scrip moved to Rs 221.75 as on November 27, a jump of Rs 168.
Similar movement was witnessed in Bongaigaon Refinery, whose shares have surged from Rs 61.85 on October 26 to Rs 98.95 on November 27, a 60 per cent jump.
Besides the three oil refiners, other companies whose derivative contracts have been banned include Tata Teleservices (Mah), J P Hydro, NIIT Technologies, IFCI and Adlabs Films, according to the NSE circular.