Shares of oil and gas companies are trading higher by up to 10% in opening deals on BSE after the Cabinet Committee of Economic Affairs (CCEA) agreed to raise gas prices to US$8.4/mmbtu, effective April 2014, for a period of five years.
Oil and Natural Gas Corporation of India (ONGC), Reliance Industries, Oil India and Cairn India are up between 4-10% on BSE. The BSE Oil and Gas index has surged nearly 5% at 9,025 compared to 1.5% rise in benchmark Sensex at 0917 hours.
The hike is positive for upstream companies such as ONGC, Oil India and Reliance Industries, analysts say. Analysts at Angel Broking estimate ONGC’s EPS to rise by 4-7% for every US$1/mmbtu increase in gas price.
Reliance Industries' EPS is expected to increase by only 2-5% in FY2015 on account of increase in gas prices as production has declined from its KG D6 basin to 18mmscmd (against targeted 60mmscmd), an oil & gas sector analyst in a note.
Among individual stocks, ONGC has rallied 10% to Rs 353, followed by Oil India (9% at Rs 621), Reliance Industries (5% at Rs 873) and Cairn India (4% at Rs 300).
Oil and Natural Gas Corporation of India (ONGC), Reliance Industries, Oil India and Cairn India are up between 4-10% on BSE. The BSE Oil and Gas index has surged nearly 5% at 9,025 compared to 1.5% rise in benchmark Sensex at 0917 hours.
The hike is positive for upstream companies such as ONGC, Oil India and Reliance Industries, analysts say. Analysts at Angel Broking estimate ONGC’s EPS to rise by 4-7% for every US$1/mmbtu increase in gas price.
Reliance Industries' EPS is expected to increase by only 2-5% in FY2015 on account of increase in gas prices as production has declined from its KG D6 basin to 18mmscmd (against targeted 60mmscmd), an oil & gas sector analyst in a note.
Among individual stocks, ONGC has rallied 10% to Rs 353, followed by Oil India (9% at Rs 621), Reliance Industries (5% at Rs 873) and Cairn India (4% at Rs 300).