Nifty Oil & Gas Fell 3% In Trade On Monday — Here's Why

The Nifty Oil & Gas index was one of the worst-performing sectoral indices in trade on Monday. The index fell to an intraday low of 2.94%, with 13 out of 15 constituents closing in the red.

The weakness in oil and gas stocks came in the backdrop of a couple of disappointments for the sector in the Union Budget for financial year 2025-26.

Here's why Budget 2025 weighed negatively for Nifty Oil & Gas index:

Oil marketing companies like Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. fell between 5% to 7% in trade today. This was due to the companies getting no compensation for the LPG losses they have been incurring during the fiscal. The compensation ask was a total of Rs 40,000 crore, as per Nuvama Research.

In the nine-month period ended December 2024, all the three companies recorded an aggregate loss of around Rs 29,200 crore. If the same average monthly loss on LPG sales continue, Indian Oil could see an annual loss of around Rs 18,600 crore, while Bharat Petroleum and Hindustan Petroleum could record an annual loss of Rs 9,600 crore to Rs 9,700 crore in fiscal 2025, as per NDTV Profit's calculations.

The Budget 2025 also slashed the import duty on propane from 15% to 2.5%. This makes propane cheaper for Indian industries to buy. As per Incred Research, propane prices are now expected to drop by Rs 3–4 per kilogram, making the it around Rs 4-6 cheaper compared to natural gas.

This put city gas distribution firms, especially Gujarat Gas Ltd., at risk. The company has the highest exposure to industrial customers between 65%-70%. Incred Research estimates a 15% to 20% loss for the company, which could then hit Gujarat Gas' Ebitda negatively by 10% to 12%.

Other companies like Indraprastha Gas Ltd. and Mahanagar Gas Ltd. could see a lower Ebitda impact of 2% due to their limited exposure to the industrial customers.