Tension in the Gulf countries has now reached a dangerous point. America and Israel together have taken a big step against Iran and started ‘Operation Epic Fury’. Under this, fierce air and sea attacks have been carried out on many targets of Iran. Countering this action, Iran has also targeted American military bases in Qatar, Kuwait and UAE with its missiles. This all-out war is going to have a direct impact on the heartbeat of the global economy i.e. crude oil. While there is an atmosphere of panic in the stock markets around the world, for the Indian stock market this crisis has brought a big profit opportunity for a government company.
There may be a huge rise in ONGC shares
On one hand, there is fear of decline and panic in the entire market, on the other hand, this geopolitical crisis can become a reason for big economic benefits for India’s giant government company ‘Oil and Natural Gas Corporation’ (ONGC). There is a simple mathematics of economics that when the prices of crude oil skyrocket at the international level, the companies extracting oil from land and sea get a boost.
Since the main work of ONGC is exploration and production, when crude oil becomes expensive, the company will be able to sell its extracted oil in the international market at much higher and attractive rates. Its direct and major benefit will be seen in the form of huge increase in the company’s per barrel earnings and its overall profit margin. This is the reason that when the markets open on Monday, huge buying of investors can be seen in ONGC shares.
ONGC shares have increased by 23.91 percent
Investors’ trust in this government company is already strong in the stock market. If we look at the figures of the last one year, then ONGC shares have made a spectacular jump of about 23.91 percent. At the same time, since the beginning of this year till now, its shares have registered a tremendous rise of 17.30 percent.
At present the share of this company is trading at the level of around Rs 279. The better performance of the company can be gauged from the fact that recently this share has also touched its 52-week high of Rs 282.50 (52-Week High). Amidst this new surge in crude oil, this stock once again seems to be moving towards creating a new record.
Benefit for one, loss for others
Every incident in the stock market has two sides. While on one hand the increase in cost of crude oil is no less than a boon for oil producing companies like ONGC, on the other hand it is an alarm bell for some other big companies of India. In India, oil marketing companies like Indian Oil (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) buy crude oil and refine it in their refineries.
Crude oil acts as a raw material for these petroleum companies. When the raw material becomes expensive in the market, the costs of these refining companies will increase significantly, due to which there is a fear of shrinking their profits.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.