Oil & Natural Gas Corporation Ltd. Falls 2.53%: 3 Key Factors Driving the Weekly Decline

27 July: Intraday Low Amid Price Pressure

ONGC’s shares opened the week under pressure, closing at Rs.238.60, down 4.08% from the previous close. The stock hit an intraday low of Rs.241.05, marking a 3.06% drop during the session despite the Sensex gaining 1.05% to close at 36,207.16. This divergence highlighted stock-specific weakness within the oil sector, as ONGC underperformed both its sector and the broader market.

Technical indicators painted a bearish picture, with the stock trading below all key moving averages including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. The weekly MACD and KST indicators were bearish, while monthly indicators showed mixed signals. The Relative Strength Index (RSI) on a weekly basis remained bullish, but monthly RSI was inconclusive. Bollinger Bands suggested moderate volatility with a downward bias.

Despite the price pressure, ONGC maintained an attractive dividend yield of 5.54%, supporting its appeal for income-focused investors. However, the recent downgrade by MarketsMOJO from Buy to Hold on 23 July 2026, with a Mojo Score of 58.0, reflected growing caution amid these technical headwinds.

27 July: Heavy Put Option Activity Indicates Bearish Sentiment

On the same day, the options market revealed a surge in put option volumes at the ₹245 strike price expiring on 28 July 2026. A total of 2,705 contracts traded, generating a turnover of ₹87.03 lakhs, with open interest standing at 1,108 contracts. The underlying stock price closed slightly below this strike at Rs.242.61, making these puts attractive for protective hedging or bearish speculation.

This concentrated put activity signalled investor caution, with many positioning for a potential decline below ₹245. The stock’s technical setup was mixed, trading above its 20-day moving average but below other key averages, indicating weakening momentum. Delivery volumes also declined by 36.83% compared to the five-day average, suggesting reduced investor participation that could amplify volatility.

The large-cap status of ONGC, with a market capitalisation of ₹3,12,934 crores, means institutional investors often use options for risk management. The elevated put open interest ahead of expiry underscored a cautious stance amid uncertain oil price dynamics and global economic concerns.

28 July: Technical Downgrade and Bearish Momentum

Following the prior day’s weakness and option market signals, ONGC’s share price closed at Rs.238.60 on 28 July, down 4.08% from the previous close. The stock traded closer to its 52-week low of Rs.227.60 than its high of Rs.307.50, underscoring the recent technical deterioration. This contrasted with the Sensex’s modest 0.14% decline, highlighting ONGC’s relative underperformance.

Technical indicators confirmed a shift from mildly bearish to bearish momentum. The stock traded below its key moving averages, with daily moving averages signalling downward pressure. The weekly MACD remained bearish, while the monthly MACD was mildly bearish, suggesting no immediate reversal. RSI readings hovered in neutral zones, and Bollinger Bands indicated bearish pressure on weekly charts and mild bearishness monthly.

The Know Sure Thing (KST) indicator was bearish weekly but bullish monthly, reflecting short-term weakness amid longer-term potential. On-Balance Volume (OBV) showed no clear weekly trend and a mildly bearish monthly stance, indicating volume flows did not support price advances. These mixed signals contributed to MarketsMOJO’s downgrade of ONGC’s mojo grade from Buy to Hold on 23 July 2026, signalling a more cautious outlook.

Within the oil sector, ONGC’s weekly return of -4.39% notably underperformed the Sensex’s -1.12%, reflecting sector-specific challenges. Despite this, the stock’s longer-term performance remains robust, with three-year and five-year gains of 39.53% and 108.20% respectively, outperforming the benchmark.

29-31 July: Modest Recovery Amid Mixed Market Signals

After the sharp declines earlier in the week, ONGC’s stock showed signs of modest recovery. On 29 July, the price slipped slightly by 0.23% to Rs.238.25, while the Sensex gained 1.02%. The following sessions saw gains of 1.41% and 0.35% on 30 and 31 July respectively, closing at Rs.241.60 and Rs.242.45. Despite these gains, the stock ended the week down 2.53% overall, underperforming the Sensex’s 2.39% rise.

Volume levels declined notably from the start of the week, with 3.25 million shares traded on 27 July dropping to under 500,000 shares by week’s end. This reduction in liquidity may have contributed to the stock’s muted price action despite broader market strength.

The stock’s technical indicators remained cautious, with the price still below several key moving averages and mixed momentum signals. The market’s focus on the upcoming expiry of put options at the ₹245 strike price likely influenced trading dynamics, with investors closely watching price levels around this critical threshold.

Key Takeaways

1. Technical Weakness and Bearish Momentum: ONGC’s share price faced significant pressure early in the week, falling below key moving averages and triggering a downgrade to Hold by MarketsMOJO. Technical indicators such as MACD, KST, and Bollinger Bands signalled bearish momentum, suggesting near-term challenges.

2. Elevated Put Option Activity Reflects Caution: The surge in put option volumes at the ₹245 strike price ahead of expiry indicated growing investor hedging and bearish sentiment. This concentration of open interest near the current price level heightened price sensitivity and potential volatility.

3. Underperformance Against Sensex: Despite a broadly positive market environment, ONGC underperformed the Sensex by over 4.9% during the week, reflecting sector-specific headwinds and stock-specific factors. The stock’s dividend yield of 5.54% remains a positive attribute amid the volatility.

Overall, the week’s developments underscore a cautious environment for ONGC, with technical and options market signals pointing to potential downside risks. Investors should monitor price action closely, particularly around key support levels and option expiry dates, to gauge the stock’s near-term trajectory.

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