Oil and gas stocks steady after windfall tax trimmed to nil; Indian Oil, ONGC, GAIL top winners, Adani Total dips 5%
- Oil and gas stocks reacted positively to windfall tax reduction to zero on Tuesday. Indian Oil, ONGC and BPCL were top gainers, while Adani Total Gas, RIL and IGL were under pressure. The windfall tax to NIL is revised due to fluctuations in crude oil prices.
Oil and gas indices traded on a steady note on Tuesday after the government trimmed windfall tax rates to zero. In this sector, Indian Oil, ONGC and GAIL India gained the most, while Adani Total Gas, Indraprastha Gas and heavyweight Reliance Industries (RIL) were top underperformers. BSE Oil & Gas index overall witnessed a 147 points or 0.8% upside so far in the day.
At the time of writing, BSE Oil & Gas traded at 18,438.65 up by 58.39 points or 0.32%. The index also touched an intraday high of 18,527.28.
Meanwhile, the Nifty Oil & Gas index saw a marginal upside of 0.12% to trade at 7,576.80. This index crossed 7,600 mark to touch an intraday high of 7,622.95.
Indian Oil was the top gainer with an upside of 2.03% followed by ONGC and BPCL soaring by 1.5% and 1.3%. Gujarat Gas and HPCL also advanced by 1.2% and 1.1% respectively. GAIL and Petronet LNG surged by nearly a percent.
In regards to top bears, Adani Total Gas dipped by 5% followed by IGL and RIL whose share prices tumbled by 1% and 0.7% respectively.
The rally in Indian Oil can also be attributed to its Q4 earnings.
Read here: Dividend stock hits 52-week high before Q4 results today. Do you own?
On Monday, the government reduced windfall tax on petrol, diesel and aviation turbine fuel at zero. Earlier, the windfall tax on petroleum crude was trimmed to ₹4,100 per tonne from May 1st, as against ₹6,400 per tonne which was from April 19.
The NIL windfall tax is due to oil price fluctuations.
On Tuesday, crude oil prices gained momentum. The Brent Crude traded at $75.76 a barrel up by 0.7%, while US WTI advanced by 0.66% to $71.60 per barrel.
The oil benchmarks had advanced over 1% on Monday, halting 3 trading session losing spree.
Read here: Govt cuts windfall tax on crude oil to zero
In the past week, crude oil prices erased their earlier gains and fell in the week that ended on May 12, due to an unexpected jump in US crude oil inventories that sparked demand concerns. Also, crude was pressurised by a sharp uptick in US dollar.
However, some support was seen after the improved demand outlook by OPEC+. According to their monthly report, world oil demand is likely to rise by 2.33 million barrels per day (bpd), or 2.3% in the second half of 2023.
In the current week, ICICI Direct Research said, "crude oil prices are likely to trade with a negative bias amid uncertainties regarding US debt ceiling and ongoing concerns of financial health of regional banks. Further, crude oil prices may slip on weak demand from the top crude oil importer China. Also, the expected increase of almost 5% in US crude oil production may remain a dampener for prices."
Also, the brokerage expects MCX crude oil prices to face a hurdle near ₹6100 and weaken towards of ₹5,600. In Nymex $75 would act as major hurdle for the prices in the week.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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