Reliance Industries and ONGC shares were hammered on Friday after the government imposed export taxes on petrol, diesel and a windfall tax on domestic crude oil to boost internal supplies.
Energy stocks plunged as India imposed a windfall tax on oil companies who had benefited from rising global crude prices and announced export taxes on gasoline, diesel, and jet fuel.
The Nifty Energy index fell 3.7 per cent in its sharpest drop since mid-May.
Reuters reported that oil-to-retail giant Reliance Industries Limited (RIL), India’s most valuable company, shed $19.35 billion in market value as its stock plunged as much as 8.7 per cent, marking its biggest intraday slide since November 2, 2020.
RIL stock was last trading over 6 per cent lower at Rs 2,436 per share, with the market capitalisation standing at Rs 16.5 lakh crore, on the BSE index.
State-owned oil producer ONGC plummeted 12.3 per cent – its biggest slide since pandemic-wrecked March 23, 2020. Oil India slid nearly 11 per cent, while Mangalore Refinery and Petrochemical slumped 10 per cent.
According to notifications from the finance ministry, the government imposed a Rs 6 per litre tax on the export of gasoline and ATF and a Rs 13 per litre tax on the export of diesel. Additionally, it imposed an extra tax of Rs 23,250 per tonne on locally produced crude oil.
The levy on crude, which follows record earnings by state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) and private sector Cairn Oil & Gas of Vedanta Ltd, alone will fetch the government Rs 67,425 crore annually on 29 million tonnes of crude oil produced domestically.
Following Russia’s invasion of Ukraine, oil refiners, in particular Reliance Industries and Rosneft-backed Nayara Energy, made a mint by shipping fuel to impoverished areas like Europe and the US.
The export ban aims to restore domestic gasoline supplies at gas stations, some of which had run out in states like Gujarat, Madhya Pradesh, and Rajasthan as private refiners preferred to sell fuel abroad rather than locally.
“Reliance is witnessing a sharp fall after the government levied taxes on windfall gains made by domestic refineries. Earlier, Reliance was firing on all cylinders but now there is a break in its refinery business as the commodity cycle is also reversing, however other verticals have strong growth potential,” Santosh Meena, Head of Research at Swastika Investmart, told Reuters.
Separately, gold-related stocks fell on news the government has increased the import tax on the precious metal to 12.5 per cent from the current 7.5 per cent, to ease the pressure on the rupee, which has breached several key-psychological levels, including the 79 per dollar rate.
The rupee on Friday hit another all-time low rate of 79.11 against the dollar, marking a series of all-time weak levels in the last few weeks.
Jewellery makers Titan Company and Tribhovandas Bhimji Zaveri slipped 6 per cent and 4.1 per cent, respectively.
Asian stocks broadly started the new quarter on a weak note, with Indian equity benchmark bourses opening in the red.