Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Ltd (OIL) saw significant gains on Wednesday, reaching their highest levels in a year. ONGC increased by 5.79%, reaching a 52-week high of 212. Meanwhile, Oil India had an even bigger jump, with its stock increasing by 19.15% to reach its one-year high of 406.
These events occurred on December 20 against the backdrop of rising petroleum prices, which hit $79.35 per barrel. Concurrently, the government decided to lower the tax on windfall gains from the export of locally produced crude oil and diesel.
The cut in the windfall profit tax helped to boost market sentiment. According to an official statement, the levy, formerly known as Special Additional Excise Duty (SAED), has been decreased from 5,000 to 1,300 per tonne for locally produced crude oil.
Analysts predict that oil prices will remain elevated for a major amount of 2024, ranging between $80 and $100 per barrel. Despite sufficient supply, this is projected to be supported by robust demand growth, with the caveat of potential delays.
Domestic brokerages, ONGC, and Oil India, according to JM Financial, stand to benefit greatly as crude oil prices remain below $80 per barrel. According to the brokerage, recent modifications in windfall tax regulations imply that the government accepts ONGC and Oil India realizing a net crude value of $75 per barrel.
A Brent oil price range of $75-80 per barrel is also good for both ONGC and Oil India, according to the brokerage. Brent crude futures increased 7 cents, or 0.09%, to $79.30 in the latest update, while US West Texas Intermediate crude advanced 13 cents, or 0.18%, to $74.07.
ONGC was found to be trading above a number of important moving averages when the technical setting was examined, including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day simple moving averages (SMAs). The company's 14-day relative strength index (RSI) was 65.98, with a value less than 30 indicating oversold conditions and a value more than 70 indicating overbought situations. The stock of ONGC now has a price-to-equity (P/E) ratio of 8.13 and a price-to-book (P/B) ratio of 0.90.
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The stock saw strong trading activity today, with 25.96 lakh shares traded, well exceeding the two-week average volume of 6.81 lakh shares. The counter's total turnover was 53.92 crore, leading to a market capitalization (m-cap) of 2,62,802.03 crore.
Similarly, trading volumes in Oil India shares were elevated, with nearly 16.93 lakh shares changing hands - well above the two-week average volume of 2.29 lakh shares. The turnover was 64.50 crore, with a market capitalization of 42,270.11 crore.
