ONGC, Oil India under pressure after windfall tax revision; Gujarat Gas, MGL, IGL rise post-gas price hike

Oil and gas stocks were in the spotlight on Dalal Street, as market participants returned to trade on October 3 after a long weekend. While stocks of oil refiners ONGC and Oil India were under pressure owing to the Centre's move to raise a windfall tax on domestically-produced crude oil, shares in gas distributors Gujarat Gas, MGL and IGL were in demand following an increase in natural gas prices.

Oil India shares faced selling pressure after the government increased a levy on domestically-produced crude oil. | Image: oil-india.com

The entire oil and gas basket was in focus on Dalal Street on Tuesday after a host of key developments last week, including the Centre's move to raise a windfall tax on domestically-produced crude oil as well as the natural gas prices for the month. While stocks of oil refiners such as ONGC and Oil India faced selling pressure in early deals, gas distributors including Gujarat Gas, MGL and IGL were in high demand on the Street.

ONGC shares weakened by as much as Rs 7.8, or 4.1 per cent, to Rs 184 apiece on BSE, while the Oil India stock dropped by Rs 9.4, or 3.1 per cent, to hit Rs 289.3 at the weakest level of the day so far. On the flipside, Mahanagar Gas shares surged by Rs 75.5, or 7.3 per cent, to Rs 1,104.5 apiece at the intraday high. The IGL and Gujarat Gas stocks registered gains to the tune of 2-3 per cent to Rs 467.3 and Rs 430, respectively. Among oil marketing companies, while Indian Oil and Bharat Petroleum shares took a hit of half a per cent each, Hindustan Petroleum shares managed an intraday gain of as much as 1.6 per cent.

Meanwhile, airline and restaurant stocks were also in the spotlight after OMCs revised the monthly prices of aviation turbine fuel, or jet fuel, and commercial LPG. SpiceJet and InterGlobe Aviation shares rose up to 1.5 per cent. Restaurant stocks were a mixed bag, with Devyani International, Jubilant FoodWorks and Speciality Restaurants rising up to 1.5 per cent, and Barbeque Nation and Sapphire International falling up to one per cent.

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The government increased the windfall tax on domestic crude oil to Rs 12,100 per tonne from Rs 10,000, with effect from September 30, marking a second increase within a fortnight. In mid-September, the Centre raised the windfall tax to Rs 10,000 per tonne from Rs 6,700 per tonne.

On the other hand, the Centre reduced the levy on the exports of aviation turbine fuel, or jet fuel, to Rs 2.5 rupees per litre from Rs 3.5 rupees per litre, and diesel to Rs 5 per litre from Rs 5.5 per litre.

India imposed the windfall tax on crude oil producers in July 2022, while extending a levy on exports of petrol, diesel and aviation turbine fuel after private refiners wanted to make gains from robust refining margins in overseas markets, instead of selling in the domestic market.

Meanwhile, the Centre raised the price of domestic natural gas for October to $9.2 per million British thermal units (mmBtu) from $8.60 per mmBtu in the previous month, marking a second back-to-back upward revision in the monthly price. Its move is likely to lead to an increase in the retail prices of CNG and PNG as gas distributors may pass on higher costs to the consumer, say analysts.

In April, the country switched to a new pricing mechanism for natural gas to keep the domestic rates aligned with market dynamics. The move followed recommendations of an expert committee constituted by the government in October 2022.

With inputs from agencies

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