ONGC, Oil India, Hindustan Oil Gain Up To 7% On Natural Gas Price Hike

Shares of oil drilling and exploration company Oil and Natural Gas Corporation Ltd. (ONGC) surged over 7 percent in early trade on Tuesday (October 5, 2021) to day's high price of Rs. 158.35. This is also the stock's 52-week high price. The stock is the top Nifty gainer in today's session.

ONGC, Oil India, Hindustan Oil Gain Up To 7% On Natural Gas Price Hike

Since Friday (October 1, 2021), shares of oil exploration and production entities have been gaining ground after 62 percent increase in domestic natural gas prices. Notably for the October 2021-March 2022 period, price of natural gas that is domestically produced has been increased to $2.9 per million British thermal units (mBtu). Worth mentioning that the price hike this time around, has been made after a gap of nearly 2 years.

"The Ministry of Petroleum and natural gas (MoNG) in accordance with the New Domestic Natural Gas Pricing Guidelines, 2014 has increased the domestic gas price to US$3.2/mn BTU for H2FY2022 from US$2/mn BTU in the previous half. This gas price hike is as per the government stated formula and so it is on expected lines," Sumit Pokharna, Vice President - Fundamental Research at Kotak Securities said

"We believe gas price hike will be positive for upstream sector which includes ONGC, OIL India, RIL and Hindustan Oil Exploration. On the flip side, domestic gas consuming sectors like City gas distribution (like IGL, MGL and Gujarat Gas) will get impacted in the short-run," he added.

Likewise, other scrips from the upstream segment including OIL gained over 4 percent to day's high price of Rs. 251.95. Similarly, Hindustan Oil Exploration company gained almost 5 percent.

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