ONGC, BPCL, HPCL, other oil stocks in focus as India cuts windfall tax to ₹4,600 per tonne

This comes in the aftermath of the government, via a notification issued late on Wednesday, slashing the windfall tax on the export of domestically produced crude oil.

The tax, which is levied in the form of Special Additional Excise Duty (SAED), has been reduced to ₹4,600 per tonne from ₹7,000 per tonne. The new rates are effective from August 1, an official notification stated.

Meanwhile, the windfall tax on the export of petrol, diesel and jet fuel or ATF has been retained at nil.

The Indian government began to impose the windfall tax from July 2022 onwards, after refiners drew superprofits due to the export of crude at elevated global prices. The move is aimed at ensuring sufficient supply in the domestic market.

The tax rates are revised on a fortnightly basis, after taking into consideration the average global oil prices over the preceding two weeks.

Oil stocks in focus

The reduction in windfall tax on petroleum crude will benefit Indian refiners, as it will improve their margins on its export.

In the past, an increase in the SAED on petroleum crude has led to a plunge in the shares of oil marketing companies (OMCs) in the subsequent trading session. On the other hand, its reduction has been followed by OMCs trading higher at the bourses.

Notably, oil stocks traded mixed on Wednesday, with BPCL settling 0.53% higher at ₹350.05 apiece on the NSE, but HPCL declining 0.88% to ₹392.25.

Indian Oil also slid 0.7% to ₹181.67 per share, whereas ONGC edged 0.69% higher to end the day's trade at ₹334.2.