Windfall tax effect: ONGC, Oil India shares under pressure; is there a long-term opportunity?
ONGC and Oil India shares were under pressure on Monday after the government imposed a windfall tax on petroleum crude to Rs 1,600 per metric tonne from zero, reintroducing it after a gap of two months.
Shares in upstream oil companies ONGC and Oil India were under pressure on Monday after the government imposed a windfall tax on petroleum crude to Rs 1,600 per tonne from zero, reintroducing it after a gap of two months. The changes came into force on Saturday.
ONGC shares declined by as much as Rs 2.7 or 1.6 per cent to Rs 166.6 apiece and the Oil India stock dropped by Rs 2.2 or 0.8 per cent to Rs 254 apiece on BSE.
On the other hand, the stocks of oil marketing companies Indian Oil, Bharat Petroleum and Hindustan Petroleum gained around 1-2.5 per cent, as the government left the windfall tax on diesel, petrol and aviation turbine fuel (ATF) — or jet fuel — unchanged at zero.
In May, the Centre had cut the windfall tax on petroleum crude to zero from Rs 4,100 per tonne.
Are there investment opportunities in the oil & gas space?
"Crude oil prices are expected to be rangebound over the long term to stabilise around $60-70 a barrel levels... Oil may not rise too much from current levels so the long-term story there has already played out," Sharad Avasthi, Head of Research (PCG) at SMIFS, told Zee Business.
Avasthi sees promising opportunities in oil marketing companies instead, with targets to the tune of Rs 135 and Rs 450-500 for Indian Oil and Bharat Petroleum respectively.
What is windfall tax?
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