The share prices of the energy sector majors saw a sharp rise led by the state-run Oil and Natural Gas Corp (ONGC) as the crude prices rallied owing to the optimism driven by the COVID-19 vaccine rollout plans across the globe.
ONGC shares opened at Rs 92.60 before surging over 10 per cent to reach an intraday high of Rs 100.8 in the early trading session. It had previously closed at Rs 91.65 on Thursday. The last time these price levels were observed was in February this year. It is still a long way from the 52-week high of Rs 133.40 but has gained around 30 per cent in just the last month.
ONGC, which has lost nearly a third of its market value this year, climbed 10% after Brent rose above $50 for the first time since March, as coronavirus vaccination rollouts kept hopes alive that demand for crude would build up next year.
In a first since March 2016, the global financial services provider, Morgan Stanley, upgraded ONGC stock to ‘overweight’ from ‘equal weight’ earlier, and raised its price target to Rs 115 apiece from Rs 84, according to a Bloomberg Quint report.
Brent crude was up 0.2 per cent at $50.36 a barrel. It is the first time since March that Brent breached the $50 mark. The US Energy Information Administration (EIA) has revised its oil price forecast for Brent and West Texas Intermediate for 2020 and 2021.
ONGC has been making significant gains since its wholly-owned overseas arm ONGC Videsh Ltd (OVL) struck oil in its CPO-5 block in Llanos Basin in Colombia. The announcement was made last week after the market closed for the weekend. OVL enjoys a 70 per cent stake in CPO-5 with the remaining 30 per cent is held by Geopark.
The standalone net profit of ONGC remained at Rs 2,878 crore YoY for the July-September quarter, a decline of 55 per cent, due to the impact of the slowing down of economies because of the pandemic. In the same period last year, the net profit stood at Rs 6336 crore.
Meanwhile, natural gas transmission company GAIL Limited also gained as much as 7.5 per cent to hit a high of Rs 128.80 and Indian Oil Corporation Limited rose over 4 per cent to a high of Rs 95.95 on Nifty.
As of 12:45 pm, ONGC shares traded 7.09 per cent higher at Rs 98.15 on Nifty, while GAIL and IOCL traded at Rs 127 and Rs 95.25 respectively.