BSE Oil & Gas Index Rises 3%: What’s Driving the Rally?

The primary indices of the Indian stock market marked a green exit yesterday, on 28th April 2025, with a nearly 1.2% rise in both NIFTY and SENSEX. Another index that joined the green bandwagon was the BSE Oil and Gas index with an intraday jump of around 3%. The index touched an intraday high of 26,551.71 yesterday and is currently up by nearly 1%. What factors caused the rally? Let’s decode

BSE Oil And Gas Index Overview

The BSE Oil & Gas Index, launched on 23rd August 2004, serves as a sectoral benchmark reflecting the performance of key players in India’s oil and gas industry. It comprises the top 10 oil and gas companies from the broader BSE 500, covering segments such as exploration, refining, marketing, transmission, and distribution. The top 10 constituents (by weightage as of 25th March 2025) include-

Company	Weight (%)
Oil & Natural Gas Corporation Ltd.	20.68%
Reliance Industries Ltd.	19.13%
Bharat Petroleum Corporation Ltd.	12.66%
GAIL (India) Ltd.	11.47%
Indian Oil Corporation Ltd.	10.92%
Hindustan Petroleum Corporation Ltd.	8.03%
Petronet LNG Ltd.	5.12%
Oil India Ltd.	4.83%
Adani Total Gas Ltd.	3.85%
Indraprastha Gas Ltd.	3.30%

The index is calculated using a modified free-float market capitalization-weighted method, with a capping mechanism, generally a 20% weight cap, to prevent over-concentration. The index undergoes semi-annual rebalancing (in June and December) to remain aligned with the evolving market cap and sector composition. Widely regarded as a benchmark for India’s energy sector, the index is also used as an underlying for sector-focused investment products, offering investors a comprehensive view of the oil and gas space.

The Surge In BSE Oil & Gas Index

As of 28th April 2025, the BSE Oil & Gas index recorded a 3.12% intraday jump and closed at 26,493.02 for the day. 

The reasons for this surge are:

1. Reliance Industries’ Q4 FY25 Results:

Reliance Industries, one of the top three heavyweight constituents of the BSE Oil & Gas Index, delivered robust Q4 FY25 results on 28th April, triggering a nearly 5% jump in its stock. The company reported a consolidated net profit of Rs.19,407 crore, a 2.4% YoY growth, led by an overall good performance in its retail (30.4% net profit growth) and digital services (25.7% net profit growth) arms. 

While revenue from the oil and gas segment was slightly muted, the diversification across consumer and digital verticals drove overall investor optimism—the announcement of a Rs. A 5.5 per share dividend has been added to the positive momentum. The strong financial performance led to positive brokerage commentary and upgrades, positioning Reliance’s rally as a key trigger for the oil and gas index’s rise.

2. Sector-Wide Optimism and Anticipation of Positive Earnings

Other major stocks within the BSE Oil & Gas Index also showed price gains on 28th April. These included BPCL, HPCL, ONGC, IOC, GAIL, Adani Total Gas, and Indraprastha Gas Ltd., with increases ranging approximately between 2% and 4.5%. Market activity indicated anticipation surrounding their upcoming Q4 FY25 earnings announcements. Before April 28, Indraprastha Gas Ltd. had reported its results, which were perceived positively by investors. Broader investor participation in oil marketing and gas distribution companies contributed to the index’s overall movement on that trading day.

3. Broader Market Sentiment and Global Cues:

The surge in the BSE Oil & Gas Index coincided with gains across major Indian equity benchmarks. On 28th April, both the BSE Sensex and NSE Nifty closed higher. This trading activity occurred in the context of foreign institutional investor inflows and reports suggesting a possible easing of trade tensions between key global economies. In Asia, most equity markets recorded positive trends, creating a supportive external environment. These broader factors may have contributed to increased participation in sectoral indices, including oil and gas.

4. Reliance Industries’ Index Weight and Influence:

Reliance Industries Ltd., with an approximate weight of 19.13% in the BSE Oil & Gas Index, holds significant influence over its movement. While not singularly dominant, changes in its stock price can materially affect index performance. The 5% gain in Reliance’s stock on 28th April translated into a measurable upward impact on the overall index value. The correlation between large-cap stock performance and index fluctuations is consistent with the index’s methodology, which assigns weights based on free-float market capitalization.

5. Sectoral Context and Long-Term Industry Trends:

In addition to immediate triggers, several long-term factors form the backdrop to developments in the oil and gas sector. Government policies, such as the Oilfields (Regulation and Development) Amendment Bill, 2024, and exploration initiatives under the Open Acreage Licensing Policy (OALP), aim to improve domestic energy production. 

Global oil price movements, including OPEC+ output decisions, continue to influence profitability and investor interest. The US EIA projects India to be a leading source of global oil demand growth in 2024 and 2025. Furthermore, Indian oil and gas firms have announced plans to increase their renewable energy capacity as part of their long-term sustainability strategies. These factors contribute to the evolving market environment in which sector indices operate.

Takeaway For Investors:

The BSE Oil & Gas Index remains a key benchmark for tracking the performance of India’s oil and gas sector. Its recent surge is primarily attributed to the stock performance of major constituents and broader market sentiment. However, a broader analysis reveals other underlying factors that affected the index over the years and may continue to do so-

1. Over the past year, the BSE Oil & Gas Index has delivered returns ranging from -7% to -11%, underperforming the BSE Sensex (+8% to +9%) and the NSE Nifty (+7% to +9%). This relative underperformance may be attributed to factors such as price volatility in global crude oil markets, sector-specific regulatory developments, and shifting investor preferences. 

However, the three-year return of the BSE Oil & Gas Index stands at 36.69% as of 29th April 2025, indicating long-term positive growth, albeit lower than the 40.89% to 42.43% delivered by the Sensex and Nifty, respectively, over the same period.

2. Several macroeconomic and geopolitical factors still influence the performance of the oil and gas sector. These include global crude oil prices, OPEC+ production decisions, government policies on exploration and refining, as well as the gradual shift toward renewable energy. Anticipation around the upcoming OPEC+ meeting in May 2025 also adds an element of uncertainty regarding near-term supply-side developments.
3. India’s projected role as a leading contributor to global oil demand growth in 2024 and 2025, according to the US Energy Information Administration, underscores the sector’s significance in the broader economic landscape. At the same time, Indian oil and gas companies have announced plans to expand their renewable energy capacity over the long term, reflecting evolving priorities in line with the global energy transition.

Bottomline:

Overall, while the sector has experienced phases of volatility, it continues to play a significant role in India’s economic framework. The BSE Oil & Gas Index serves as an indicator of this sector’s performance, shaped by both domestic and international developments. Thus, future movements in the index are likely to depend on a combination of financial results from key constituents, policy direction, and global energy market dynamics.

If you plan to add sectoral investment options from this sector, ensure you examine every aspect in detail before finalizing your investment decision. 

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