ONGC gains 3%, nears 52-week high as govt slashes windfall tax on crude oil

Shares of Oil and Natural Gas Corporation (ONGC) were up 3 per cent to Rs 163.90 on the BSE in Tuesday's intra-day trade amid heavy volumes after the government slashed windfall tax on Crude Oil produced at home to Rs 4,100 per tonne from Rs 6,4000 per tonne.

The stock of the state-owned oil exploration & production company was trading close to its 52-week high level of Rs 168.40, touched on May 5, 2022.

Shares of Oil India, meanwhile, were quoting 1 per cent higher at Rs 257.75. In comparison, the S&P BSE Sensex was up 0.58 per cent at 61,467 at 10:11 AM.

Cess has been reduced to $7/bbl from May 2 in the twentieth review of windfall taxes. This will reduce the cess of domestic upstream companies including ONGC and Oil India. Special Additional Excise Duty (SAED) levied on refineries for export of petrol, air turbine fuel (ATF) and diesel continues to be nil.
According to technical analyst at ICICI Securities, the share price of ONGC is at the cusp of a breakout above last one month's consolidation range (Rs 159-146), signaling resumption of up move and fresh entry opportunity.

The brokerage firm expects the stock to maintain positive bias and head towards Rs 171 levels in the coming sessions.

"Sustained higher crude oil prices and gas realisations can result in better profitability. Periodic revision in windfall taxes will be the key monitorable. Value unlocking from subsidiaries and other investments along with lower holding company discount on investments and High dividend yield and payout ratio are key triggers for future price performance ," said analysts at ICICI Securities.