The shares of Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Ltd experienced a notable surge on Wednesday, reaching their highest levels in the past year. ONGC recorded a 5.79% increase, hitting a 52-week high at ₹212. Meanwhile, Oil India saw an even more substantial surge, with its stock soaring by 19.15% to reach its one-year peak price of ₹406.
On December 20, these events unfolded against the backdrop of a strengthening in crude prices, which reached $79.35 per barrel. Concurrently, the government opted to reduce the levy on windfall gains arising from the export of domestically produced crude oil and diesel.
The reduction in the windfall profit tax contributed to a favorable market sentiment. The tax, formerly levied as Special Additional Excise Duty (SAED), has been reduced from ₹5,000 to ₹1,300 per tonne for domestically produced crude oil, as indicated in an official notification.
Analysts anticipate a prolonged period of elevated oil prices ranging between $80 and $100 per barrel for a significant portion of 2024. This is expected to be fueled by strong demand growth, despite the existence of abundant supply, albeit with the caveat of potential delays.
According to JM Financial, domestic brokerage, ONGC and Oil India stand to gain significantly as crude oil prices remain below $80 per barrel. The brokerage highlighted that recent changes in windfall tax policies indicate the government’s acceptance of ONGC and Oil India realizing a net crude value of $75 per barrel.
The brokerage also noted that a Brent crude price range of $75-80 per barrel is advantageous for both ONGC and Oil India. In the latest update, Brent crude futures showed a marginal increase of 7 cents, or 0.09%, reaching $79.30, while US West Texas Intermediate crude rose by 13 cents, or 0.18%, to $74.07.
Analyzing the technical setup, ONGC was observed to be trading above various key moving averages, including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day simple moving averages (SMAs). The 14-day relative strength index (RSI) for the company stood at 65.98, where a level below 30 indicates oversold conditions and a value above 70 is considered overbought. ONGC’s stock is currently valued with a price-to-equity (P/E) ratio of 8.13 and a price-to-book (P/B) value of 0.90.
The stock experienced robust trading activity today, with 25.96 lakh shares being exchanged, significantly surpassing the two-week average volume of 6.81 lakh shares. The total turnover on the counter amounted to ₹53.92 crore, contributing to a market capitalization (m-cap) of ₹2,62,802.03 crore.
Similarly, Oil India shares encountered heightened trading volumes, with approximately 16.93 lakh shares changing hands—well above the two-week average volume of 2.29 lakh shares. The turnover reached ₹64.50 crore, resulting in a market capitalization of ₹42,270.11 crore.
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Published: 20 Dec 2023, 04:53 PM IST
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