OMCs a short-term play; beware of froth in IPO market: Nitin Raheja

economictimes.indiatimes.com:

Nitin Raheja, ED, Julius Baer Wealth Advisors, says “OMCs are short-term tactical plays and that is how we look at them. If in the next couple of months, before the election code comes into play, crude remains benign, then they will be good, in fact, for a good part of the next year. But fundamentally, the fact that they do not really have complete freedom and there is interference from the government and the ministry, means they can’t be long-term strategic compounders.”
This year has been marked by the comeback of the oil and gas PSUs. What is your take on this because there was always a regulatory overhang which challenged the institutional investors not to participate in these stocks in a big way. Do you think some of those worries are getting abated now?
Nitin Raheja: I do not think so. I do not see anything which has significantly changed from a regulatory perspective. These are good short-term tactical plays. OMCs are benefitting from the fact that crude has remained relatively benign, so they have not faced those pressures. If in the next couple of months, before the election code comes into play, crude remains benign, then they will be good, in fact, for a good part of the next year. But fundamentally, the fact that they do not really have complete freedom and there is interference from time to time from the government and the ministry do not make them long-term strategic compounders. They are good short-term plays that is how we look at it.

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