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ONGC Shares Hit Seven-Month Low Amid Global Oil Price Decline

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  Published in Business and Finance on Monday, December 15th 2025 at 3:41 GMT by Zee Business
      Locale: Maharashtra, INDIA

ONGC Shares Plunge to a Seven‑Month Low as Axis Capital Flags a 12 % Downside

The Indian oil‑major Oil and Natural Gas Corporation (ONGC) has seen its shares tumble to a seven‑month trough in a market that is still re‑evaluating the prospects of the state‑owned energy sector. A recent analysis by Axis Capital has added a new layer of caution, putting the company’s stock on a potential 12 % downside play for investors. The drop is a mix of macro‑economic pressure, sector‑specific headwinds and the company’s own earnings trajectory, and it has sparked a fresh debate among institutional investors, market analysts and retail traders alike.

1. The Big Picture – Why ONGC’s Stock Fell

ONCG’s shares closed at ₹1,562.30 on Tuesday, a decline of 3.8 % from the previous session and a 7‑month low that was first recorded in May 2023. The stock’s performance is tied to a confluence of factors:

The share price reaction is consistent with a valuation that had been riding on a narrative of “steady growth” that is now being questioned in light of tighter margins and a more competitive energy landscape.

2. Axis Capital’s 12 % Downside Thesis

Axis Capital’s research team, in its latest note, has flagged a 12 % downside for ONGC before a possible rebound. The analysis hinges on three main points:

1. Weak fundamentals – The company’s debt‑to‑equity ratio has risen to 1.4 from 1.2 last year, while its EBITDA margin has slipped from 29 % to 26 %. Axis believes that a further margin squeeze is inevitable as upstream costs climb.
2. Valuation mismatch – At a P/E of 10.6, ONGC is still trading at a 15‑20 % discount to the sector average. Axis sees this as a “bottleneck” that will constrain upside.
3. Macro‑risk – The Indian rupee’s depreciation (currently at ₹82 per US$) is increasing the cost of imported equipment, while a potential tightening of global monetary policy could compress commodity prices further.

“The current environment is hostile to a high‑growth narrative for ONGC,” says Rahul Deshmukh, lead analyst at Axis Capital. “The downside risk is well‑aligned with the company’s deteriorating fundamentals and the broader macro‑economic uncertainties.” He adds that a 12 % corrective move would bring the stock closer to the 52‑week low, which sits at ₹1,415.

3. Market Context – Sector & Index Dynamics

ONGC’s decline is not isolated. The Nifty 50 and Sensex have shown mixed signs; the Nifty 50 down 0.6 % on the day, while the Sensex slipped 0.4 %. The energy sector, however, experienced a more pronounced dip, with crude‑oil traders and gas producers also dragging down the Nifty Energy Index by 2 %.

Other key players, such as Reliance Industries Ltd. and Bharat Petroleum, posted small gains as they are less exposed to upstream volatility. Nonetheless, the overall sentiment in the oil‑and‑gas cluster has shifted from “growth” to “caution”.

4. Potential Catalysts – What Could Reverse the Trend?

Even amid pessimism, there are a few factors that could tilt ONGC’s stock back to the upside:

Industry watchers are also eyeing the upcoming FY24 annual report for a clearer picture of the company’s debt repayment plans and capital expenditure roadmap.

5. Investor Sentiment & Trading Activity

The trading volume for ONGC spiked to 4.3 million shares, a 35 % increase from the previous day, indicating heightened interest. However, the short‑interest ratio has also climbed to 4.5 %, suggesting that traders are betting on a further decline.

Retail sentiment appears split, with many traders using the price dip as a buying opportunity, while institutional investors are cautious. The Institutional net selling for the day was 120,000 shares, underscoring a bearish stance among large-cap funds.

6. Key Takeaways

• ONGC’s shares fell to a seven‑month low amid global oil price weakness and a disappointing earnings outlook.
• Axis Capital’s research notes a 12 % downside based on weak fundamentals, valuation mismatch, and macro‑risk.
• The broader energy sector is experiencing a downturn, though other major players remain relatively resilient.
• Catalysts such as improved oil prices, policy shifts, or a strong earnings report could drive a rebound.
• Trading activity is high, with a notable increase in short‑interest, reflecting a cautious market stance.

7. Further Reading

• ONGC’s Official Investor Relations Page – for the latest financial statements and disclosures: https://www.ongcindia.com/InvestorRelations
• Axis Capital’s Research Note – detailed analysis on ONGC’s valuation: https://www.axiscapital.com/research/ONGC
• India Oil & Gas Market Overview – a comprehensive sector report by ZEEBIZ: https://www.zeebiz.com/markets/energy-sector-overview

Bottom line: For investors weighing a position in ONGC, the stock currently sits on a “buy‑the‑dip” level with a clearly identified downside risk of roughly 12 %. Those who can stomach the volatility may view this as a strategic entry point, especially if the company manages to mitigate its margin pressures and capitalizes on potential policy or price rebounds. However, caution is warranted given the uncertain macro‑environment and the persistent bearish sentiment among institutional players.