Shares of upstream oil companies such as Reliance Industries Ltd (RIL), Oil & Natural Gas Corporation Ltd (ONGC), and Oil India Ltd were trading in the green zone on Thursday on the back of a reduction in windfall tax levied on domestically produced crude as well as exports.
Shares of RIL gained over 1%, whereas ONGC and Oil India gained over 3% in Thursday's trade.
Windfall tax on crude was reduced to ₹4,350 ($52.60) per tonne on Wednesday, February 15, from ₹5,050 per tonne.
Also Read: Windfall tax: Why do governments around the world impose it?
"Cess has been reduced to nearly US$7.4/bbl from February 16 in the fifteenth review of windfall taxes. This will reduce cess of domestic oil production companies," said ICICI Direct Research in its report.
According to the notification, the government also decreased the export duty on diesel from 7.50 rupees per litre to 2.50 rupees per litre and the export tax on aviation turbine fuel from 6 rupees per litre to 1.50 rupees per litre.
As of Thursday, ONGC has gained 27.41% from a 52-week low of ₹119.8 recorded on July 6, 2022. Shares of Oil India have gained 51.47% from the 52-week low of 167.8 apiece recorded on September 28, 2022.
Analysts have a positive view on petroleum stocks, and according to them, positive momentum can continue and any dips should be considered as a buying opportunity.
According to a MintGenie poll, 15 analysts on an average recommend ‘strong buy’ rating for Oil India, 24 analysts on an average recommend ‘buy’ rating for ONGC, and 30 analysts on an average recommend ‘buy’ rating for RIL.
Also Read: RIL, ONGC, Oil India pare gains after rising on windfall tax cut. Here's what analysts say