Why are the Oil Stocks in India under pressure?
Author: Sailee D Thakur
In an already bullish marketplace, shares of oil marketing companies such as "Oil Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation Limited (HPCL), GAIL (India), and Reliance Industries plummeted up to 4% in intraday trade on Monday".
With a 4% loss, government-owned ONGC was the worst performer in the oil and gas sector. The large-cap oil stock has dropped as much as 4.2 percent today, hitting an intraday low of 155 against a previous closing price of Rs. 161.8 on the BSE. On the other hand, the BSE benchmark Sensex was trading 400 points higher at 54,724 at the time of reporting.
In order to combat growing inflation, the central government announced on Saturday a cut in the central excise duty on fuel and diesel, as well as an Rs. 200 subsidy on LPG gas cylinders, among other measures that will cost the exchequer over Rs 1 lakh crore. Additionally, the duty on diesel has been decreased by Rs 6 per litre, bringing the price of petrol and diesel down by Rs. 9.5 and Rs. 7 per litre, respectively.
After multiple price rises in late March owing to the energy crisis created by the Russia-Ukraine war, gasoline and diesel prices, have remained stable in the last two months.
Oil businesses have recently underperformed the benchmark indices due to increased expenses and declining margins, which coincided with a record spike in crude oil prices throughout the Russia-Ukraine crisis. Fuel costs are rising as Brent crude; the worldwide standard, hovers above $110 per barrel following the Russia-Ukraine conflict. The cost of crude oil has increased as the US dollar has strengthened against domestic currencies.
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