ONGC and Oil India shares jumped as much as 4% during the day as OPEC cuts oil demand growth in 2022; brokerage sees more than 60% upside in both stocks


Shares of Oil and Natural Gas Corporation (ONGC) and Oil India soared as much as 4% on BSE in intraday trading on Wednesday. This was despite a lackluster show by benchmarks Nifty50 and BSE Sensex.

Stocks gained on soaring crude oil prices.

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State-owned Oil India climbed 4% on BSE to daily high of 239.35 rupees per share and ONGC jumped more than 3% to also hit daily high of 174.4 rupees per share on intraday BSE. The latter company‘s stock was one of the top intraday Nifty50 gainers today.

Crude oil prices rose about 6% on Tuesday amid lower supply from oil producers and an easing of lockdown restrictions in parts of China, according to a Reuters report.

In another trigger, OPEC (Organization of the Petroleum Exporting Countries) also cut its forecast for global oil demand growth in 2022 on Tuesday, citing the impact of Russia’s invasion of Ukraine and rising inflation as crude prices soar and the resurgence of the Omicron. variant of the coronavirus in China, according to a Reuters report.

In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) said global demand would increase by 3.67 million barrels per day (bpd) in 2022, down 480,000 bpd from its previous forecast. , according to another Reuters report.

ONGC and Oil India have outperformed the Sensex by 74 and 42% respectively over the past twelve months as the price of Brent rose 68%, HDFC Securities said and expects the outperformance to continue.

The Administered Pricing Mechanism (APM) domestic gas price was revised up 110% to $6.1/mmbtu in the first half of FY23, and the brokerage further expected that it increases another 45% to >8.8 USD/mmbtu in the second half of FY23.

HDFC Securities estimated that the price of Brent, which is currently above USD 100/bbl, is likely to remain high as growth in supply from the Organization of the Petroleum Exporting Countries (OPEC) is likely to be at the bottom. lagging global demand growth and supply-side concerns about geopolitical issues would prevail.

While maintaining a long position, the brokerage sees up to 65% upside on ONGC and Oil India with a target price of Rs 275 and Rs 380 per share, respectively.

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