Technically, ONGC ( CMP: 304) has strong positional support of around 298-295 zone & sustain below that it could fall to 279-264. Consecutive closing below 264, it could crash to 249-234 zone in the worst bear market scenerio (low probability as of now).
On the upside, ONGC need to sustain above 304 for an immediate target of 310-322. Consecutive closing above 322, its short term target may be near 335-352 and sustain above that it could scale 375 in the mid term. Consecutive closing above 375, it could touch 395-400 & 472 zone in the long term under bull market scenerio (FY:16-18).
Bottom line (Cyclical Positional Trading Levels):
264-279-293-298-304-310-322-335-340-348-352-360-375
Yesterday evening Indian Govt. announced much awaited scrapping of fuel subsidy on PSU upstream companies (Such as ONGC, OIL) for 2015-16 for Rs.10000 cr. This may fire up such stocks as it will definitely improve the bottom lines of these companies. The Govt. will in turn will bear the burden of this subsidy.
In India, as par rough estimates, total tax collected in various ways by the Govt (Central +State) from the petro products is higher than the total subsidy passed by it. May be existing higher excise duty on petro products is helping the Govt a lot. Oil marketing companies (Govt) also increased the retail price of Petrol/Diesel by a significant amount wef from yesterday midnight. In any way, market will look into how the Govt. will make up this extra subsidy burden in its fiscal account and what will be the plan after 2015-16.
This whole process of subsidy scrapping may be a quick step towards the disinvestment programme by the Govt. and it may not allow ONGC to sell at cheaper rate below 300.
ONGC also strikes a significant Oil & Gas discovery in KG Basin recently. Govt. also eased rules for Oil & Gas development which is also beneficial for both ONGC & RIL.
With Gas price & policy clarity and complete Petrol/Diesel price deregulation, Oil & Gas sector may hog the lime lights in the days ahead and ONGC, OIL, RIL are some of them.
As par BG metrics of quick TF model, median value of ONGC is around 330 and projected fair value may be around 360-400 (FY:16-17) under the current market conditions.
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| ONGC | 30.98 | 159.81 | 10.57 | 337.32 | 319.63 | 328.48 | 347.48 | 311.99 |
| ONGC | 36.99 | 176 | 10.57 | 368.59 | 349.26 | 358.93 | 347.48 | 311.99 |
| ONGC | 44.05 | 193.6 | 10.57 | 402.23 | 381.14 | 391.68 | 347.48 | 311.99 |
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