Credit Suisse positive on airlines, retailers

That usually leads to a fall in the oil price and where it to rise from here it would threaten Saudi Arabia's market share strategy - especially with capital expenditure levels in the shale industry being switched back on at $65 per barrel. On a tactical basis US dollar strength also points to a weaker price for crude.

The Swiss broker forecast oil prices would weaken in the near-term before recovering to $71 per barrel in quarter four of 2015. However, analyst Andrew Garthwaite added that since 1860 bear markets in oil have lasted between 11 to 28 years, not seven.

Given that fundamental backdrop, Garthwaite pointed out he was still ‘underweight’ integrated oil companies, highlighting how sell-side net buy recommendations had risen sharply, reaching levels that often – 75% of the time in the past – had subsequently seen the sector underperform over the following three to six months.

However, he was looking to buy some of those segments of the market which had suffered as a result of the rise in oil prices. Hence, he was looking to add to his position in airlines. Ten per cent off the oil price usually leads to about 5% outperformance, Garthwaite explained.

As well, Credit Suisse's proxy for airlines’ margins, calculated as the gap between airlines’ CPI and fuel CPI “is abnormally supportive.”

Buy IAG, easyJet and Ryanair, the analyst said.

The broker also reiterated its ‘overweight’ recommendation on UK retailers, if oil peaks in the near-term, among other factors given the outlook for real disposable income growth is very good. So, buy Kingfisher, Poundland and B&M.

Stocks from India - a large oil importer - should also outperform. Historically they have done so when they are this oversold.

However, investors may want to be cautious towards Russia-exposed European stocks, such as Oriflame Cosmetics, Adidas and Telia Sonera, which tend to track the oil price.