Oil firm PSUs, ONGC, Oil India shares rose 4% as crude oil prices hits over 2-month high

Shares of Oil and Natural Gas Corporation (ONGC) traded at Rs 255.20, and Oil India at Rs 483.90, both gaining 4 percent on the BSE during Friday's intraday session. This increase occurred amid significant trading volumes in an otherwise weak market, as Brent crude oil prices reached their highest point in over two months.

The rise in oil prices was fueled by optimism regarding China's economic growth prospects. In his New Year address on Tuesday, Xi Jinping stated that China would implement more proactive policies to promote growth in 2025. 

On Friday, oil prices continued to rise, following a session where they closed at their highest level in more than two months. This bullish sentiment was supported by expectations that governments around the world may enhance policy measures to stimulate economic growth, potentially boosting fuel demand.

Brent crude futures were trading above $76 per barrel, while WTI Crude was around $73.40 per barrel. Both prices increased by 0.3 percent and 0.36 percent, respectively, on the day.

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In comparison, the BSE Sensex was down 0.63 percent at 79,437 at 09:59 AM. ONGC share price (down 26 percent) and Oil India share price (down 38 percent) have corrected over 25 percent from their respective record highs touched in August 2024.

Rating Agency, India Ratings and Research (Ind-Ra) has maintained a 'neutral' outlook on the oil and gas sector for the financial year 2025-26 (FY26). The agency expects the credit profile of upstream oil companies to remain dependent on crude oil prices.

Earnings before interest, taxes, depreciation, and amortization (Ebitda) generation for upstream companies may fall with a moderation in oil prices and a reduction in production from legacy fields. However, the impact of low crude oil prices is expected to be offset by the removal of special excise on the production of crude and an increase in production expected from discoveries, it added.

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