ONGC Shares fell after HSBC Downgrade with Falling Oil Prices

Shares of oil major ONGC were recorded low on Thursday after global brokerage HSBC downgraded the company’s rating.  HSBC has downgraded ONGC to “reduce” with a target price of Rs 235, which represents a 20% downside from Wednesday’s closing price.

The brokerage holds a pessimistic outlook on the oil sector due to declining prices, which it believes poses a threat to the feasibility of upcoming projects. The company faced pressure earlier this month when the prices of Brent crude dropped below the critical threshold of $75 per barrel.

HSBC identified several key concerns related to declining production rates and reduced guidance for the KG field, which it said is likely to impact the overall performance of the company.

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On Wednesday upstream oil majors like ONGC and Oil India showed little movement during early trade after the Indian government slashed windfall tax on petroleum crude to zero.

Back then, Nuvama Institutional Equities maintained a "reduced" rating for the stock with a price target of Rs 232. The research firm expressed a cautious outlook on ONGC, highlighting concerns over missed production targets and the decline in oil prices.

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