Oil & Natural Gas Corporation ONGC: In view of the biggest rally in 11 months in January in ONGC’s shares, ICICI Value Discovery Fund has reduced its stake in it. ONGC stock has gained 21 per cent during the last one month due to the strength of 15 per cent in crude oil prices in the global market.
In fact, crude oil has reached a seven-year high due to rising geopolitical tensions in Eastern Europe and a boom in global demand.
ONGC’s value rises by 2% when crude becomes 1 dollar costlier
Oil has been seeing an uptrend over the past few months amid the dwindling threat of the COVID-19 pandemic amid insufficient supplies due to low spare capacity in the Oil and Petroleum Exporting Countries (OPEC).
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According to analysts, with a strengthening of $1 in crude oil prices, the value of ONGC normally rises by two per cent. During the quarter ended December, the company’s consolidated net profit grew by a whopping 220 per cent year-on-year, driven by increased earnings from crude oil.
ICICI Value sold 1200 crore shares of ONGC
Data compiled by Prime Database shows that ICICI Value Discovery Fund pulled out more than Rs 1,200 crore by selling around 7.48 crore shares of the company in January. In terms of value, ICICI Prudential Mutual Fund is the biggest seller of ONGC.
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As of the end of December quarter, mutual funds held 6.19 per cent stake in ONGC, of which ICICI Prudential Value Discovery Fund alone held 2.86 per cent. In contrast, other mutual fund schemes have bought stocks worth Rs 150 crore in ONGC.
ONGC’s confidence in brokerage remains intact
Most brokerages have expressed confidence in the company’s stock amid firm crude oil prices. Edelweiss Securities has retained its “buy” rating for the stock after the December quarter. Edelweiss said in a note this week, “It has disappointed on the production front, but it will benefit from the price hike. We are concerned about OPEC and geopolitical tensions and expect prices to rise by 13 per cent in FY23.”
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