All about Nifty Oil & Gas

With this, we’ve finally reached the penultimate chapter of this module on sectoral indices. In this, we’re going to be concentrating on one of the sectors that has the most impact on the economy - oil and gas. 

In terms of oil and gas refinement capacity, India is currently in the second position in all of Asia. Our petrochemical industry, which includes refineries, plays a key part in delivering refined fuels to help keep the economy afloat.

With the oil and gas sector taking on such an important role, it is crucial to constantly keep an eye on the performance of the sector and the various industries within it. This is where the Nifty Oil & Gas Index comes in. And here’s everything you need to know about it. 

What is the Nifty Oil & Gas Index?

To accurately capture the performance of the petrochemical industry and its various constituents, the National Stock Exchange came up with the Nifty Oil & Gas sectoral index. This index consists of 15 of the largest companies operating under the oil, gas, and petroleum industry that are listed in the NSE. Nifty Oil & Gas is widely used by traders and investors to gauge the behaviour of the stocks of petrochemical companies.  

What are the constituents of the Nifty Oil & Gas Index?

Now that you’ve gotten a brief overview of the Nifty Oil & Gas Index, let’s take a look at the top 10 constituents and their respective weightages in the index. 

Here’s a brief overview of all the 15 constituents of the Nifty Oil & Gas index. 

1. Reliance Industries

• Founded in 1973 in Mumbai, Reliance Industries is the country’s largest conglomerate with multiple business verticals. 
• Among its many big business segments is the petrochemicals division. The company is a leader in the petrochemical and hydrocarbon business. 
• Reliance Industries is involved in exploration, production, refining, marketing, and selling petroleum and other by products of crude oil such as diesel, LPG, aviation fuel, and Naphtha, among others.

2. Oil & Natural Gas Corporation

• Established in 1956 by the government of India, the Oil & Natural Gas Corporation (ONGC) is one of the largest companies in the crude oil and gas sector. 
• The company’s oil and gas exploration division is by far the best in the country and has had exceptional success. 
• In addition to exploration, ONGC is also involved in development, production, and refinement of crude oil and natural gas. 

3. Bharat Petroleum Corporation

• Incorporated in 1952, Bharat Petroleum Corporation (BPCL) is another public sector unit in the petroleum industry. 
• BPCL is a downstream company and is primarily involved in the refinement and marketing of crude oil products such as petrol, diesel, LPG, lubricants, and aviation fuel. 
• The company operates its petroleum marketing division under the ‘BPCL’ brand, the LPG division under the ‘BharatGas’ brand, and its lubricants division under the ‘MAK’ brand.  

4. GAIL (India)

• Established in 1984 by the government of India, GAIL is a New Delhi based entity.
• The company’s core business is the exploration, production, processing, and distribution of natural gas and LPG. It also successfully runs a city gas distribution system also.   
• GAIL is also involved in liquid hydrocarbon and petrochemical businesses as well.   

5. Indian Oil Corporation

• Another Public Sector Unit (PSU) owned by the Ministry of Petroleum and Natural Gas, Indian Oil Corporation is a like-for-like competitor of BPCL. 
• The company’s primary businesses include refining, transportation, marketing, distribution, and selling of petrochemical products and natural gas. 
• Indian Oil Corporation operates its petroleum marketing division under the ‘Indian Oil’ brand, the LPG division under the ‘Indane’ brand, and its lubricants division under the ‘SERVO’ brand.  

6. Petronet LNG

• Petronet LNG was formed in 1998 by the government of India exclusively for Liquefied Natural Gas. 
• The company’s primary business is importing liquefied natural gas via pipelines and distributing the same through various LNG terminals spread across the country. 
• Petronet LNG has two main LNG terminals in India - one in Dahej and another one in Kochi. 

7. Hindustan Petroleum Corporation

• Incorporated by the government of India in 1974, Hindustan Petroleum Corporation is another like-for-like competitor of both BPCL and IOC. 
• The oil marketing company is in the business of transportation, refining, distribution, and sales of petroleum products including LPG. 
• All of the HPCL’s products such as petrol, diesel, LPG, and lubricants are marketed under the ‘HP’ brand. 

8. Indraprastha Gas

• Established in 1998, Indraprastha Gas is a natural gas company with its headquarters in New Delhi. 
• The core business of the company is the distribution of natural gas for both commercial and cooking purposes. 
• Indraprastha Gas’ natural gas distribution system is concentrated in and around the state of New Delhi.

9. Adani Total Gas

• Incorporated in 2004, Adani Total Gas is a part of the Adani Group of companies. 
• Supply of natural gas through a city gas distribution system is the primary business of the company. 
• Adani Total Gas supplies Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) for residential, commercial, and industrial customers. 

10. Gujarat Gas

• Established in 1980, Gujarat Gas is owned by the state government of Gujarat and is one of the largest gas distribution companies in India. 
• The company is involved in the supply of Piped Natural Gas to industrial, residential, and commercial customers. 
• In addition to that, Gujarat Gas also supplies Compressed Natural Gas to the transport sector. 

11. Mahanagar Gas

• Founded in 1995, Mahanagar Gas is a gas distribution company that’s headquartered in the city of Mumbai. 
• The company’s primary business is distribution of Compressed Natural Gas and Piped Natural Gas to industries, commercial enterprises, and residential places of living. 
• Mahanagar Gas is also involved in the gas geyser installation for domestic usage. 

12. Aegis Logistics

• Aegis Logistics is a downstream company operating in the oil and gas sector and was incorporated in 1956. 
• Since its establishment, the company has been in the business of transportation of liquid petroleum products such as liquefied petroleum gas. 
• Aegis Logistics is also into storage and terminalling of LPG as well, with 6 storage facilities spread across the country. 

13. Castrol India

• Castrol India is a subsidiary of Castrol Limited UK and is owned by British Petroleum. 
• The company is one of India’s leading and preferred lubricant brands enjoying more than 20% market share.
• Though Castrol India is only well known for its automotive lubricants, the company also has a huge share in the industrial lubricant segment as well. 

14. Gujarat State Petronet

• Established in 1998, Gujarat State Petronet is the country’s largest gas distribution company. 
• The company owns and operates Gujarat Gas and has a 2,239 kilometer-long gas pipeline network in the state of Gujarat. 
• Gujarat State Petronet is completely owned by the state government of Gujarat and is currently undertaking gas exploration in Yemen, Indonesia, Egypt, and Australia.

15. Oil India

• Oil India, incorporated in 1959, is another one of the Indian government’s oil and gas sector units. 
• The company is involved in the exploration, development, extraction, and production of crude oil and natural gas. 
• Oil India is currently the country’s second largest hydrocarbon exploration and production company.

Trading in Nifty Oil & Gas

As with many of the other sectoral indices we’ve seen in the previous chapters, the National Stock Exchange hasn’t launched any derivative contracts with the Nifty Oil & Gas Index as the underlying asset. This effectively means that you cannot trade and profit off the short-term price movements in the index. 

S&P BSE Oil & Gas: The BSE alternative

The Bombay Stock Exchange has also come up with its own oil and gas sectoral index to track the performance of the stocks of petrochemical companies listed on its exchange. Unlike Nifty Oil & Gas, the S&P BSE Oil & Gas index consists of just 10 constituents. The BSE index omits Adani Total Gas, Aegis Logistics, Gujarat Gas, Mahanagar Gas, and Oil India from its list of constituents. 

Wrapping up

With this, we’re officially done looking at the key sectoral indices in the Indian stock market. In the next and final chapter of this module, we’ll quickly run through the other relatively minor indices that we haven’t seen up until now. And so, buckle up for the ride.

A quick recap

• To accurately capture the performance of the petrochemical industry and its various constituents, the National Stock Exchange came up with the Nifty Oil & Gas sectoral index. 
• This index consists of 15 of the largest companies operating under the oil, gas, and petroleum industry that are listed in the NSE.
• The companies whose stocks make up this index are Adani Total Gas, Aegis Logistics, Bharat Petroleum Corporation, Castrol India, GAIL (India), Gujarat Gas, Gujarat State Petronet, Hindustan Petroleum Corporation, Indian Oil Corporation, Indraprastha Gas, Mahanagar Gas, Oil & Natural Gas Corporation, Oil India, Petronet LNG  and Reliance Industries.
• The National Stock Exchange hasn’t launched any derivative contracts with the Nifty Oil & Gas Index as the underlying asset.
• The BSE’s equivalent oil & gas sectoral index is the S&P BSE Oil & Gas.
• Unlike Nifty Oil & Gas, the S&P BSE Oil & Gas index consists of just 10 constituents. 
• The BSE index omits Adani Total Gas, Aegis Logistics, Gujarat Gas, Mahanagar Gas, and Oil India from its list of constituents.