ONGC rallies over 4% on diesel price hike, oil production

MUMBAI: Oil and gas major ONGC surged to highest level since January 14 and was the second best performing Nifty stock in trade today as sentiment turned bullish on the counter after oil marketing companies hiked diesel price by Rs 0.45 per litre last Friday.

According to analysts, the price hike will help upstream companies like ONGC in lowering fuel subsidy burden.

“This is the third hike since January 17, when the cabinet had decided to empower the OMCs to increase the price of diesel by small proportion every month. Earlier last week, OMCs had reduced the price of petrol by Rs 2 and had kept the diesel price unchanged,” said Angel Broking note.

“This move is positive for upstream companies under our coverage (ONGC and Gail) as it will help them reduce the subsidy burden. However, we maintain our under recovery estimates and would revise them post 4QFY2013 results,” the note added.

The stock was also in action Cairn India announced commencement of oil production from Aishwariya field in the Rajasthan Block bordering Pakistan. ONGC has a 30 percent stake in the Rajasthan Block while Cairn India holds the remaining.

At 11:00 a.m.; ONGC was at 308.70, up 4.34 per cent, on the BSE. It touched a high of Rs 309.45 and a low of Rs 301 in trade today.