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    Get your portfolio ready for election results: Hedge the re-rated oil and gas sector stocks

    Synopsis

    Right from power, railways, PSU banks, sectoral lenders to oil and gas there are many sectors which have made a comeback in the last 10 years. Comeback both in the real business sense, where the operating matrix and fundamentals of the sector have improved which has led to better performance. Also a comeback on valuation front, where the stocks which were quoting at a price earning multiple of single have been now consistently quoting in high double multiples. A number of them have seen this transformation due to a stable policy environment, policy push and policy cleanup which the government has undertaken in the last ten years. The consensus estimate of the street is that policy continuity is the most critical thing for the re-rating to continue. In this new series, we take a different sector and how much they are dependent on government policy and how investors can protect their portfolio from any sudden decline.

    Oil and gas sector is probably the most critical sector, but the fact is that since time immemorial the companies in this sector have been facing so many uncertainties. Right from oil bonds issue to inflexibility of pricing, to uncertainty whether the government divesting its stake or not to lack of clarity on their plan to tap into clean energy. Both the downstream and upstream oil companies had problems, some common and some which were unique
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    The Economic Times