Technical Trends Shift to Mildly Bullish
The primary catalyst for ONGC’s rating upgrade lies in its technical outlook, which has transitioned from mildly bearish to mildly bullish. Key technical indicators reveal a nuanced but positive momentum. The Moving Average Convergence Divergence (MACD) on a weekly basis is bullish, signalling upward momentum, although the monthly MACD remains mildly bearish, suggesting some caution over longer horizons.
Relative Strength Index (RSI) on the weekly chart is bearish, indicating short-term price weakness, but the monthly RSI shows no clear signal, reflecting a neutral medium-term stance. Meanwhile, Bollinger Bands are bullish on both weekly and monthly timeframes, suggesting price volatility is currently supporting upward price movement.
Daily moving averages have turned bullish, reinforcing the short-term positive trend. However, the Know Sure Thing (KST) oscillator remains mildly bearish on both weekly and monthly charts, and Dow Theory and On-Balance Volume (OBV) indicators show no definitive trend, highlighting some mixed signals in volume and trend confirmation.
Despite these mixed signals, the overall technical grade improvement has been sufficient to influence the upgrade, with the stock price closing at ₹269.10 on 6 February 2026, up 0.79% from the previous close of ₹267.00. The stock remains near its 52-week high of ₹277.80, indicating resilience in price action.
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Valuation Remains Attractive Amid Sector Peers
ONGC’s valuation metrics continue to favour investors, with an enterprise value to capital employed ratio of just 0.9, indicating the stock is trading at a discount relative to its peers’ historical averages. This valuation attractiveness is further supported by a return on capital employed (ROCE) of 12.6%, which is considered robust for the oil sector.
The company’s market capitalisation stands at ₹3,38,535 crores, making it the second largest in the oil sector after Reliance Industries. ONGC accounts for 11.50% of the sector’s market cap and contributes 18.63% to the industry’s annual sales of ₹6,57,927.61 crores, underscoring its significant market presence.
Despite a modest 2.89% return over the past year, ONGC has outperformed the Sensex’s negative 2.24% year-to-date return and delivered a remarkable 175.58% return over five years, far exceeding the Sensex’s 64.22% in the same period. This long-term outperformance highlights the stock’s resilience and growth potential.
Financial Trend: Strong Quarterly Performance and Debt Metrics
Financially, ONGC has demonstrated solid performance in Q2 FY25-26, with net sales growing at an annualised rate of 12.81% and operating profit surging by 30.64%. The company’s ability to service debt remains strong, with a low Debt to EBITDA ratio of 1.42 times, reflecting prudent leverage management.
Key financial highlights include an operating profit to interest coverage ratio of 7.78 times, the highest recorded, signalling robust earnings relative to interest expenses. Cash and cash equivalents have reached a peak of ₹47,029.75 crores, providing ample liquidity to support operations and investments.
Profit before depreciation, interest, and tax (PBDIT) for the quarter stood at ₹26,521.19 crores, marking a significant milestone in operational efficiency. However, it is worth noting that profits have declined by 13.3% over the past year, a factor that investors should monitor closely despite the positive quarterly results.
ONGC also offers a high dividend yield of 4.6%, making it an attractive option for income-focused investors seeking steady returns amid market volatility.
Quality Assessment: Strong Institutional Backing and Sector Leadership
ONGC’s quality grade remains favourable, supported by a high institutional holding of 37.41%. Institutional investors typically possess superior analytical resources, lending credibility to the stock’s fundamentals and outlook. This backing often translates into greater market stability and confidence.
As a leader in the oil exploration and refinery industry, ONGC’s strategic importance is underscored by its substantial contribution to sector revenues and market capitalisation. Its position as the second largest company in the sector further enhances its quality credentials, reflecting operational scale and market influence.
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Technical Outlook and Market Performance
From a technical perspective, the upgrade reflects a cautious but optimistic shift in momentum. While some indicators such as the weekly RSI and KST remain mildly bearish, the overall trend is improving, supported by bullish daily moving averages and positive Bollinger Bands signals. This suggests that short-term price action is gaining strength, potentially paving the way for further gains.
Comparatively, ONGC’s stock returns have outpaced the Sensex over one month (13.07% vs. -2.49%) and three years (86.49% vs. 36.94%), reinforcing the stock’s relative strength despite some recent profit pressures. The stock’s 52-week trading range between ₹205.00 and ₹277.80 indicates a solid recovery from lows, with current prices near the upper end of this range.
Investors should weigh the mixed technical signals alongside the company’s strong fundamentals and valuation appeal. The upgrade to a Buy rating by MarketsMOJO, with a Mojo Score of 74.0, reflects this balanced but positive outlook.
Conclusion: A Balanced Upgrade Reflecting Strength and Caution
ONGC’s upgrade from Hold to Buy is a comprehensive reflection of improved technical trends, attractive valuation, solid financial performance, and strong quality metrics. The company’s ability to maintain low leverage, generate healthy operating profits, and sustain high cash reserves underpins its financial resilience.
While some profit decline and mixed technical signals warrant caution, the overall outlook is constructive. Institutional confidence and sector leadership further bolster the stock’s appeal. For investors seeking exposure to the oil sector with a blend of growth and income potential, ONGC’s upgraded rating offers a compelling case.
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