Advise to buy and hold ONGC: P Phani Sekhar

In a chat with ET Now, P Phani Sekhar, Fund Manager-PMS, Angel Broking, shares his views on the OMCs. Edited Excerpts:

ET Now: From the oil and gas space, how are you positioning yourself? What is the view on ONGC right now?

P Phani Sekhar: Well ONGC looks good. Notwithstanding today's news about possible acquisition of two Siberian fields which is a welcome development. Apart from that there was an overhang on ONGC mainly due to two reasons. One was the surprise subsidy loot that the government had put on ONGC and the divestment overhang. But the way things are going I would be extremely doubtful if the government indeed will be successful in divesting ONGC. This means that the overhang of follow on public offer and a possible retail discount are elevated.

More or less the government, in order to meet its budgeted short fall and divestment targets, might dip into Coal India's cash reserves like it did last year with a special dividend. The time left is very well and that the divestment has not yet started. So this is good news for ONGC.The investors must position themselves favourably there. OMCs benefit very little on the balance because the decline in GRMs is shaving off large part of the benefit. They were getting because of lesser working capital requirements. Upstream is the way to go and there again I would position as I said in ONGC.