Relationship of NIFTY 50 with
Oil and Natural Gas Corporation (ONGC)
Introduction: –
Established in 1956, the Oil and Natural Gas Corporation Limited, or ONGC, is India’s goliath in the oil and gas sector. This government-owned company plays a critical role in meeting the nation’s energy demands, contributing a staggering 70% of India’s crude oil and an impressive 84% of its natural gas production.
ONGC isn’t limited to domestic operations. Through its subsidiary, ONGC Videsh, it extends its reach to 15 countries, showcasing its global presence and impact. As the largest profit-making public sector undertaking in India, ONGC holds significant economic importance, contributing to the nation’s financial well-being.
Objective of the study: – To calculate the Data of ONGC and its significance.
Views and Reviews: –
- Oil and Natural Gas Corporation (ONGC) announced that it has incorporated a wholly owned subsidiary, ONGC Green, on 27 February 2024, with an authorized capital of Rs 100 crore and subscribed and paid up capital of Rs 1 crore. ONGC Green engage into the business of value-chains of energy business viz. renewable energy (solar, wind, hybrid, hydel, tidal and geothermal etc.), bio-fuels/ bio-gas business, green hydrogen and its derivatives like green ammonia, green methanol, storage, carbon capture utilization and storage and LNG business. On 5 December 2023, the Ministry of Petroleum & Natural Gas (MOP&NG), Government of India had conveyed their approval to form the proposed 100% subsidiary of ONGC for green energy and gas business.
Oil and Natural Gas Corporation (ONGC) is the largest crude oil and natural gas company in India, contributing around 71% to Indian domestic production. It has in-house service capabilities in all areas of exploration and production of oil & gas and related oil-field services. The Government of India held 58.89% stake in ONGC as of December 2023.
- Shares of Oil and Natural Gas Corp Ltd fell 1.3 percent after the upstream company reported weaker earnings. Analysts are awaiting its investors call which is scheduled on February 12 after 3.30pm. At 9.30am, the stock was trading at Rs 262 on the BSE, down 1.3 percent from its previous close. It opened nearly 1.5 percent lower intraday. The company’s consolidated net profit dropped by 8 percent to Rs 10,748 crore in the December quarter, with revenue falling 2.2 percent to Rs 1,65,569 crore over the previous year. Crude oil production decreased by 3.3 percent in Q3, and total oil production in the first nine months of FY24 declined 2.9 percent. The decline is attributed to factors like platform shutdowns, cyclone Biparjoy, and natural field decline. ONGC plans proactive measures, including interventions and new drilling, to counter the decline in output. The company expects oil production from KG-DWN-98/2 block to offset the decline. ONGC represents a significant portion of India’s oil and gas production and has a Rs 30,000 crore annual expenditure plan for further growth.
Data Collection: –
Historical data has been downloaded from 01/02/2023 to 31/01/2024 from www.nseindia.com, and the weekly returns of NIFTY 50 and ONGC are calculated from the same.
Y = a + b X
Here Y is the dependent variable (Weekly Returns of ONGC) and X is the independent variable (Weekly Returns of NIFTY 50)
ONGC Weekly Returns = 1.12 – 0.005 (NIFTY 50 Weekly Returns)
The above equation shows the relationship between Weekly Returns of ONGC and NIFTY 50.
Data Analysis: –
- of Observations are 49.
- R2 means (0.96733) 96% of ONGC Weekly Returns is explained by NIFTY 50 Weekly Returns. The rest 4% are errors which are not considered by the model.
- T stat & P value for b is -37.30 and 1.42E-36, it is less than 0.05 which means that NIFTY 50 Weekly Returns are statistically significant at 5% level.
- F = 1391.692 and P = 1.42E-36 which is less than 0.05 that means the overall the model is statistically significant.
Conclusion: –
Beta (β) is 1.12, it is more than 1 which means that we should not invest for long term.