InvestorQ : How do you see the stock of ONGC after its recent correction from higher levels?
Arusha Ray made post

How do you see the stock of ONGC after its recent correction from higher levels?

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2 months ago
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In the last few days, ONGC has been a sort of mixed bag, although the generally trend of the stock price has been lower. This is despite the sharp spike in the crude prices back to the $118/bbl levels in the Brent market. In the last 2 days, the sentiments around ONGC dampened after the government announced that it may implement a windfall gains tax on oil companies that make supernormal profits from the crude spike. EU has done that.

In response, ONGC stock fell to a 4-month low of Rs142.35. UK had taken the lead by imposing a 25% windfall tax on energy products and EU has followed suit. Not the government had hinted that India may also consider a similar arrangement in India, which led to sharp cuts in oil stocks. However, this was partially offset by the decision of ONGC to invest a total sum of Rs31,000 crore in next 3 years to explore Indian sedimentary basin.

Ironically, ONGC had touched a price level of Rs197 in January 2022 when the crude price was actually at a much lower level. The spike in the delivery volumes on Thursday and Friday indicate that the fall has come amidst a lot of delivery selling by institutional investors. The capex comes at a time when the outlays for exploration have been at the lowest levels due to ONGC running low on reserves. Now it is rethinking for the sake of oil self-sufficiency.

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