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Outcry in the stock market, but shares of ONGC and Oil India are on the rise

Samira Vishwas | May 12, 2026 10:24 PM CST

A ‘storm’ of tremendous decline is being seen in the stock market today. While on one hand Sensex has fallen by more than 800 points and IT and banking indices have collapsed, on the other hand ONGC And Oil India Shares are flying at the speed of a rocket. Despite the market being in the red, the ‘Nifty Oil and Gas Index’ remains in the green only on the basis of these two stocks. Behind this rise is a big and historic decision of the Modi government.

What decision has the government taken?

The Central Government has increased the duty on crude oil and natural gas to promote domestic energy production (Upstream Energy Sector). Drastic cut in royalty rates Done. This decision will directly benefit the government companies extracting oil and gas. Due to which their profits are expected to increase significantly.

New royalty rates: at a glance

The new rates announced by the government will not only reduce the burden on companies, Rather, it will also give them the benefit of GST savings.

category	old royalty rate	new royalty rate
onshore crude oil	16.66%	10%
offshore crude oil	9.09%	8%
natural gas	10%	8%

Other than this, Financial health of companies’ projects improved due to GST- savings. 18% There is a possibility of improvement up to.

Veteran brokerage CLSA’s bet: Expected returns up to 50%

Famous Brokerage Firms CLSA Has described this step of the government as a game-changer.

Target for ONGC: CLSA for ONGC ₹405 It has set a target price of Rs. 10,000 and has given a ‘High Conviction Outperform’ rating.
Fair Value: With this decision, the value of ONGC may increase by 7-9% and the value of Oil India by 9-11%.
Return Potential: The brokerage believes that if Brent crude remains at ₹80 per barrel, So ONGC stock 50% Can give total returns of more than Rs.

Why is this step important?

There was a long standing fear in the market that the government might increase taxes like ‘windfall tax’, Due to which Indian energy stocks were lagging behind globally. This cut in royalty has made it clear that the government is no longer in favor of increasing the tax burden on the upstream sector. This has brought back the confidence of investors.

Current position of shares (Tuesday afternoon)

These two stocks have performed brilliantly today amid the market decline:

Oil India: 8.With a gain of 63% to ₹495.Was trading at Rs 35 (day high Rs 498.90).
ONGC: It rose 5.84% to ₹297.40 (day high ₹299.90).