The Nifty Oil & Gas Index has underperformed the broader market over the six months since the West Asia conflict involving Iran, the US and Israel began on February 28, 2026, as elevated crude oil prices, supply disruptions and uncertainty surrounding the closure of the Strait of Hormuz weighed differently across the sector.
The last trading session before the conflict began was February 27, 2026, when the Nifty Oil & Gas Index closed at 12,264. As of the latest close, the index stood at 12,264, marking a decline of 9% over the period. In comparison, the benchmark Nifty 50 has fallen 3.85%, declining from 25,178 on February 27 to 24,219, indicating that the oil and gas index has underperformed the broader market during the six-month period.
However, the sector's headline performance masks a sharp divergence among individual stocks. While state-run oil marketing companies (OMCs) and some upstream players came under pressure, select logistics, gas and refining companies delivered strong gains.
Aegis Logistics leads the pack
Aegis Logistics emerged as the best-performing stock in the Nifty Oil & Gas Index, gaining 94.86% since February 27. Chennai Petroleum Corporation followed with a 46.8% gain, while Adani Total Gas advanced 24.92%.
Aegis Vopak Terminals also delivered double-digit returns, rising 18.52% over the period. GAIL (India) gained 2.49%, while Castrol India remained largely unchanged.
At the other end of the spectrum, state-run OMCs were among the biggest laggards. Indian Oil Corporation declined 26.12%, followed by Bharat Petroleum Corporation, down 19.07%, and Hindustan Petroleum Corporation, which fell 15.23%.
Among upstream companies, Oil & Natural Gas Corporation (ONGC) declined 15.43%, while Oil India fell 1.43%. Indraprastha Gas declined 13.54%, Petronet LNG fell 8.49%, Mahanagar Gas lost 7.55%, and Reliance Industries declined 6.03%.
OMCs remain a tactical bet
For investors, the key question is whether the sharp correction in OMC stocks has created a value opportunity or reflects a more persistent earnings risk.
OMCs, analysts said, remain a tactical rather than a long-term structural play because of their exposure to crude prices, geopolitics and domestic fuel-pricing policy. Structural risks, however, remain high.
The West Asia conflict and elevated crude prices severely squeezed retail fuel marketing margins, resulting in steep net losses for OMCs in Q1 FY27 despite higher revenues and healthy refining margins. Indian Oil Corporation reported a loss of Rs 2,661 crore, Bharat Petroleum Corporation reported a loss of Rs 1,873 crore, while Hindustan Petroleum Corporation posted a loss of Rs 11,526 crore. ONGC, in contrast, remained profitable, reporting a profit after tax (PAT) of Rs 5,956 crore, although compressed gross margins weighed on earnings compared with previous quarters.
According to Saurabh Jain, Head of Fundamental Research at SMC Global Securities, the correction has made these stocks increasingly attractive as value plays. However, a meaningful recovery in OMCs would require crude oil prices to stabilise below $80 a barrel to restore marketing margins.
Dhaval Popat, Analyst, Energy, Choice Institutional Equities, similarly said the investment case would improve materially if Brent crude moderates below $75–80 a barrel, marketing margins normalise and risks surrounding the Strait of Hormuz ease.
The recent correction in OMC stocks largely reflects these external uncertainties rather than a material deterioration in business fundamentals, Popat said. The government's preference for limiting retail fuel-price increases, however, remains an additional overhang.
"Accordingly, a recovery in these stocks is more likely to be driven by geopolitical normalisation and a rebound in marketing profitability than by a sustained valuation re-rating," Popat said.
Jain, meanwhile, views ONGC as a strong structural hedge against geopolitical supply shocks and oil price spikes. OMCs, he said, offer high dividend yields and long-term operating upside once retail price adjustments or government subsidies mitigate under-recoveries.
"Investors should consider a phased, selective accumulation strategy rather than aggressive buying," Jain said.
Aegis, CPCL still have room to rise
Among the sector's outperformers, analysts see further potential in Aegis Logistics and Chennai Petroleum, although the two offer distinctly different investment propositions. Aegis Logistics, they believe, offers the stronger structural growth story, while Chennai Petroleum provides higher cyclical upside with greater earnings volatility.
Jain said Aegis Logistics presents the strongest structural narrative among the outperformers, supported by record LPG throughput and significant capacity expansion. These factors helped drive its Q1 FY27 net profit up more than 200% year-on-year to Rs 484–Rs 545 crore. However, after the stock's sharp rally, Jain cautioned investors against chasing valuations and instead recommended accumulating the stock on dips.
Chennai Petroleum, meanwhile, offers greater cyclical upside, said Jain while highlighting that the company staged a sharp turnaround in Q1 FY27, posting a standalone net profit of Rs 1,016 crore, supported by expanded gross refining margins of $8.78 a barrel. Earnings, however, remain sensitive to refining spreads.
Popat has also identified Chennai Petroleum as his top bet, citing its positioning to benefit from a supportive diesel pricing environment and stronger refining economics.
"We had initiated CPCL at Rs 1,012 a share with a target price of Rs 1,265 a share, subsequently raising our target price to Rs 1,540 a share on July 25, implying 10% current upside," Popat said.
