InvestorQ : Why did the shares of oil and gas companies like ONGC, GAIL, Gujarat Gas and IGL rally so sharply on Thursday? Do you see the rally continuing?
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Why did the shares of oil and gas companies like ONGC, GAIL, Gujarat Gas and IGL rally so sharply on Thursday? Do you see the rally continuing?

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Khushi Patel answered.
5 months ago
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The big news for the hydrocarbon companies was the government commitment to invest a whopping Rs.750,000 crore into creating world class oil and gas infrastructure in India. That has much larger implications for the companies in particular and also for the share of gas in the overall fuel mix of India. The impact would be much bigger.

Shares of oil and gas companies rallied sharply after this government commitment to spend Rs.7.50 trillion into related infrastructure. Stocks like Gujarat Gas, ONGC, Gujarat State Petronet were among the biggest gainers and rallied sharply on this news. This would include investments in oil storage, port infrastructure and also infrastructure to support the city gas distributors or CGD players.

India currently depends on imports for 85% of its oil needs and 53% of its gas needs and that is putting pressure on the trade deficit. This money will be spent by the government over the next five years. More than infrastructure, the primary strategy will be having a proper policy framework for pricing oil and gas and ensuring that the infra support is smooth and world class.

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