Oil India, ONGC, IOC Shares Gain After Centre Cuts Windfall Tax To Zero

Shares of oil and gas companies including ONGC, Oil India, BPCL, Indian Oil and HPCL gained up to 2% in early trade on Wednesday after the government reduced the windfall tax on crude to 'Nil' on Tuesday.

However, Oil India and ONGC gave up the initial gains, trading 2% and 0.42% percent lower, respectively.

The windfall tax, reviewed every fortnight, has been reduced from Rs 1,850 per tonne to Rs 0, effective September 18.

This change comes as crude oil prices have seen a significant decline, dropping over 23% in the past year. The global benchmark price for Brent crude has fallen below $75 per barrel, down from more than $92 per barrel in April.

The Indian government initially introduced the windfall tax on crude oil in July 2022 to address the excessive profits gained by oil companies due to soaring global crude prices. Since these profits were largely due to external factors rather than improved performance or innovation, they were deemed windfalls.

At the time of writing, shares of Reliance Industries were trading 0.4% higher at Rs 2,956.40 apiece. While those of Mahanagar Gas were up 0.28% to Rs 1,915.40 per share. Hindustan Petroleum stock advanced 0.27%, while Indraprastha Gas rose 0.16%.

Nifty Oil & Gas was trading flat, while most of its constituents traded in the green. The benchmark Nifty 50 also traded little changed.