ONGC share price climbed more than 2% in early deals on Thursday, 10 September, in an otherwise weak market. Shares of Oil and Natural Gas Corporation (ONGC) opened at ₹236.30 against their previous close of ₹233.80 and rose 2.6% to an intraday high of ₹239.85 on the BSE. On the other hand, market benchmark Sensex slipped by more than 60 points in early trade.
Why is ONGC share price rising today?
ONGC shares are rising today amid a surge in crude oil prices driven by escalating tensions between the US and Iran. Brent crude now trades above $101 per barrel as hopes of a deal between Washington and Tehran are dashed amid fresh fights between them.
A rise in crude oil prices is generally positive for ONGC because it is primarily an upstream oil and gas producer. ONGC sells the crude oil it produces, so a higher selling price can directly increase its revenue and profitability if production volumes remain stable.
ONGC share price trend
ONGC shares are witnessing decent buying this month; it has gained 3% in September so far after a 4% fall in August.
Year-to-date, the stock is flat compared to a 12% fall in the Sensex. It plumbed a 52-week low of ₹227.60 on 30 June after hitting a 512-week high of ₹307.50 on 29 April.
Should you buy ONGC stock?
For the long term, experts and brokerage firms are positive on ONGC stock amid the government’s focus on energy security.
Recently, in July, brokerage firm Motilal Oswal Financial Services upgraded the stock to a buy due to its inexpensive valuations, a decent volume growth pickup, and the company’s key beneficiary status of a multi-year government focus on energy security.
In August, Motilal increased the target price of ONGC stock to ₹290, underscoring ONGC’s one-year forward dividend yield of 6.9% at a 3-year high – a level breached only twice in the last decade.
Besides, the brokerage firm believes crude prices could remain firm even if the Strait of Hormuz reopens, as global inventory levels remain low, a positive for ONGC.
Moreover, Motilal believes ONGC Videsh’s turnaround over the last two quarters, along with multiple assets entering development, could add nearly ₹15 per share to its target price if the run rate sustains.
On the technical front, experts expect the stock to consolidate in the short term.
“ONGC has been trading in a lacklustre manner for the last couple of weeks and forming the right shoulder of a head and shoulders formation. The neckline support of the formation is placed around the ₹225 – ₹230 spot zone. In the short term, it is most likely to trade in a consolidation range (the ₹230 – ₹250 spot zone),” said Vipin Kumar, AVP-Research at Globe Capital Market.
“A decisive break above ₹250 could push it towards ₹270 and ₹275 spot levels; conversely, a fall below the ₹225 and ₹230 spot level will be a negative development that could drag it lower towards ₹200,” said Kumar.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
