ONGC Gains 1.79% as Crude Prices Rebound Amid Israel-Palestine Conflict

ONGC Gains 1.79% as Crude Prices Rebound Amid Israel-Palestine Conflict

VoM News Desk | October 9, 2023 | 01:54 PM IST | Breaking News | Follow on Google News

ONGC Gains 1.79% as Crude Prices Rebound Amid Israel-Palestine Conflict

ONGC Gains 1.79% as Crude Prices Rebound Amid Israel-Palestine Conflict

Oil and Natural Gas Commission (ONGC), the leading upstream oil and gas producer, saw a morning trade surge of up to 1.79% on Monday, driven by the recovery in crude prices following the Israel-Palestine conflict.

The upward momentum in crude prices is expected to provide a positive sentiment boost to ONGC’s stock performance. Interestingly, ONGC emerged as one of the top five gainers on the Nifty index, even as broader indices experienced a downward trend due to the immediate impact of the Israel-Palestine conflict.

Despite reaching a 52-week high of ₹192.25 on September 29th, ONGC’s stock had undergone a correction of more than 5% in the previous week. This decline was primarily attributed to the company’s exposure to crude prices, which experienced a dip due to global slowdown concerns. However, the Israel-Palestine crisis has shifted expectations, with crude prices poised for a rebound, providing support to ONGC’s stock.

Crude Prices and Geopolitical Tensions

Oil prices surged by over $4 per barrel during early Asian trading on Monday, driven by escalating geopolitical tensions in the Middle East arising from the Palestine-Israel conflict. Any potential supply disruptions from the Middle East as a result of this conflict could lead to further increases in crude prices, which bodes well for ONGC.

According to Rahul Kalantri, VP Commodities at Mehta Equities Ltd., “We expect crude oil prices to remain volatile in today’s session.” He noted that crude oil has support at $84.10–83.40 and resistance at $85.80–86.50. In rupee terms, crude oil has support at ₹6,800-6,740 and resistance at ₹7,080–7,150.

Government Policies Impacting ONGC

While the government’s imposition of windfall taxes affects ONGC’s net realizations from selling crude oil, the company continues to enjoy healthy returns. During Q1, ONGC’s standalone net realizations stood at $76.5 per barrel, comparable to the $77.1 per barrel recorded in the previous quarter. Analysts at Motilal Oswal Financial Services estimate that ONGC will achieve net realizations of $82 per barrel during Q2.

Kotak Institutional Equities predicts that ONGC’s adjusted profits will rise to ₹12,540.6 crore during Q2, compared to ₹10,015 crore in Q1 FY24. This positive outlook, coupled with the rebounding crude prices, positions ONGC for a potentially strong performance in the near future.

VoM News Desk

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