Oil and Natural Gas Commission (ONGC), the upstream oil and gas producer gained up to 1.79% in the morning trades on Monday following the rebound in crude prices post-eruption of Israel Palestine conflict. The rising crude prices are to provide a sentimental boost to the ONGC stock. ONGC stood amongst the top five Nifty gainers on Monday on a day when broader indices were trading in the red as a kneejerk reaction to the Israel-Palestine conflict.
The stock prices of ONGC, after touching 52-week highs of ₹192.25 on 29th September, however, had corrected more than 5% during the previous week as it stood amongst the largest losers amongst Nifty stocks, following the correction in crude prices. The global slowdown concerns had weighed on the crude prices during the last week that had otherwise been rising on supply-side concerns due to production cuts by Russia and Saudi Arabia. The Israel-Palestine Crisis now however is leading to the expectations of a rebound in crude prices and remains supportive for ONGC stock prices.
Oil prices jumped more than $4 a barrel in early Asian trade on Monday, as escalating geopolitical tensions in the Middle East following Palestine Israel Conflict aided the oil market. Any supply disruptions from the middle East following the Israel Palestine conflict can lead to a rise in Crude prices.
For ONGC though adjustment by the government in windfall taxes keeps ONGC’s net realisations it earns on selling crude oil under check. Nevertheless, ONGC is still earning healthy net realizations. During Q1 at standalone levels, its net realizations stood at $76.5 a barrel, which were comparable to 77.1 a barrel seen in the previous quarter while it is estimated to earn net realizations of $82 a barrel during Q2 as per analysts at Motilal Oswal Finacial Services.
ONGC’s adjusted profits are likely to rise to 12540.6 crore as per Kotak Institutional Equities estimates during Q2 compared to ₹10015 crore during Q1 FY24.
Source Link: ONGC share price gains as crude prices surge on Israel-Hamas war | Mint