The impact of a windfall tax on Indian oil refining companies are likely to continue as the market couldn’t much understand the news properly on Friday, though on the face of it was looking negative, Zee Business Managing Editor Anil Singhvi said during a special edition of Editor’s Take. 

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The Managing Editor believes index heavyweight Reliance Industries share price has still some room to contract for around 4-5 per cent. The stock on Friday slipped 7 per cent amid the news. And, the same was also visible on Oil and Natural Gas Corporation (ONGC), fell by 12 per cent on Friday. 

The government on Friday slapped an export tax on petrol and diesel after some refineries made “phenomenal profits” shipping overseas at the cost of domestic supplies, and imposed a Rs 66,000 crore windfall tax on crude oil produced locally. 

Singhvi pointed out that the best profit-making period for refining companies, including Reliance Industries have gone and the gross refining margins may slip by $7-8 per barrel due to this news.  

Besides, the revenue and profit of Reliance may also decline with windfall tax in place, Singhvi believes. He added around Rs 25000-30000 crore profit loss for RIL is likely. 

According to the managing editor, the crude will now surge mainly due to rise in demand jump amid Europe’s winter, however, this demand likely to phenomenal if US goes under recission. So, the likely chances are that the crude oil may peak around $120-125 per barrel. 

The windfall tax has been implied on everything, said Singhvi, however, if its 100 per cent EOU (export-oriented units), then there is no restriction on volumes, he added.  

With respect to RIL, Singhvi said the demerger of the company in different business, which is likely doing rounds for quite some time will bring confidence on the share price, Singhvi said.  

He added, only good news will improve Reliance’s share, as it has been top and see a downside level of Rs 2200-2250 per share.