Analysts: Investors should pass up India’s fuel retailers

Industry analysts recommended that investors exit India’s fuel retailers and upstream oil companies.  Fuel retailers increased the price of gasoline recently and are struggling with the government subsidy payments.  Fuel is sold at subsidized prices at public sector companies’ retail outlets, with the losses shared between fuel retailers, upstream companies and the government.  An analyst with a Mumbai brokerage indicated that Indian Oil Corp., Bharat Petroleum Corp. Ltd. and other fuel retailers should expect only moderate diesel fuel price hikes.  The government recently increased the subsidy portion of the upstream companies from 33% to 38.5%.  (May 18, 2011)