RIL, ONGC, Chennai Petro shares gain after govt slashes the windfall tax on fuels

Along similar lines, the ONGC stock, which had climbed 7.02 per cent to Rs 136.40 per share on the BSE and 6.80 per cent to Rs 136.60 on NSE, ended 4.00 per cent higher at Rs 132.55 on BSE and 3.71 per cent higher at Rs 132.65.

Likewise, Chennai Petro shares, which rallied 11.50 per cent to Rs 296.65 on NSE and by 11.39 per cent to Rs 296.40 on BSE, closed 8.63 per cent higher at Rs 289.00 on NSE and by 7.35 per cent to Rs 285.65 on BSE.

Earlier in the day, Centre slashed the windfall tax on key fuels. It scrapped a Rs 6 per litre tax on export of petrol and cut the same on ATF to Rs 4 a litre from Rs 6. The tax on diesel too was reduced to Rs 11 from Rs 13 per litre. Additionally, the Rs 23,250 per tonne additional tax on crude oil produced domestically has been cut to Rs 17,000 per tonne.

Explaining the impact on the oil stocks, Swastika Investmart’s Equity Research Analyst Punit Patni said that earlier this month, the government had imposed a windfall tax on oil producers and refiners that had gained due to high overseas refining spreads and global crude prices, thus achieving super normal profits. However, due to the recent fall in global oil prices, the Centre decided to reverse the above decision and the move is positive for companies like RIL, ONGC, and Chennai Petro.

Speaking about the impact on RIL shares, Ravi Singh, vice president and head of research at Share India Securities told indianexpress.com, “RIL shares zoomed after a cut in windfall tax by the government due to softening in international prices. The stock is showing strength on technical setup well supported with robust volumes. The chart patterns are suggesting an immediate target of Rs 2,600 levels in the near term.”

Manoj Dalmia, Founder and Director at Proficient Equities said this move by the government will be a major boost to these companies as they can face earnings upgrades and better margins can be reported by them in the upcoming quarters.