Summary: Last Friday, the government took investors by surprise. It announced levy of export duty on petrol, diesel and aviation turbine fuel. Besides taxing exports, the government also announced the imposition of windfall tax on gains made by domestic refineries. A cess of Rs 23,250 per tonne on domestic crude production was also imposed. The move clipped wings of upstream oil companies with shares of Reliance Industries declining over 7%. Other related stocks fell in the range of 3.5-15%. According to independent market analyst, Ambareesh Baliga, “The measure will set the precedence for such taxes going ahead and is surely negative for refiners as well as explorers. A question which arises is that how will the industry get compensated when the prices are not remunerative?” While he suggests investors avoid buying these stocks in the dip as the upside in profits are dented, Gaurang Shah has a contrarian view. Gaurang Shah, Head - Investment Strategy, Geojit Financial Services says, the move aimed at getting domestic supply in domestic market. RIL, ONGC and Gail India can be bought on dips, he says. Other than dividend no charm in OMCs. Last Friday’s fall in benchmark indices brought them dangerously close to the bear zone territory. April-June quarter earnings season will begin this week with TCS kick-starting the earnings season. The IT firm is set to report its Q1FY23 results on Friday, July 8.
