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Mutual funds lap up oil and gas sector shares; five attractively priced stocks to pick

Mutual Funds holding in oil&gas sector has increased an all time high in February at 7.8%

Even as we continue to see an uptrend in Sensex and Nifty in recent times owing to pre-poll optimism, mutual funds managers continue to lap up Oil & Gas stocks. Mutual Fund holding in oil and gas sector stocks has reached an all time high at 7.8 percent in February, 20 basis points up from the previous month. “Oil & Gas weight increased for the fourth successive month to reach a new high of 7.8% (+20bp MoM and +120bp YoY). The sector is now at the fifth position in sector allocation of mutual funds – it was at the seventh position 12 months ago,” research and brokerage firm Motilal Oswal said in its report. The research house noted that of the top-10 stocks in terms of value increase on-month, five were from Private Banks and Oil & Gas sectors. In the sector, Motilal Oswal’s top picks include ONGC, Reliance Industires, Indian Oil, Bharat Petroleum, Oil India. We take a closer look.

According to the brokerage house Motilal Oswal, these are the five attractive oil and gas stocks to pick:

ONGC : Buy call has been retained on state-owned ONGC stock with a target price  of Rs 182. Its current market price is Rs 150. Return on Equity on ONGC for FY 19 and FY 20 is Rs 16.1 and Rs 16.4 respectively. Motilal Oswal’s target price implies an upside of 22% from the current levels.

Reliance Industries:Buy position on RIL with a target price of Rs 1,426. The current market price of RIL is Rs 1,347. Return on Equity as per the report on RIL is 12.4 and 12.6 for FY 19 and FY 20 respectively. The target price implies an upside of 6% from the current levels.

Indian Oil : Its current market price is Rs 155. Buy position has been retained for IOC at a target price of Rs 183. Return on equity as per Motilal Oswal for Indian Oil for FY 19 and FY 20 is Rs 11.2 and Rs 12.5 respectively.  Brokerage firm’s target price implies an upside of 18% from the current levels.

Bharat Petroleum: Motilal Oswal has maintained Buy position for BPCL having current market price of Rs 393 with a target price of Rs 398. Return on equity is Rs 17.8 and Rs 19.2 for FY 19 and FY 20 respectively. The brokerage house’s  target price implies an upside of more than 1% from the current levels.

Oil India : The brokerage firm Motilal Oswal has put a buy call for Oil India at a target price of Rs 239. Its current market price is Rs 178. Return on equity according to the report is Rs 11.5 and Rs 11.4 for FY 19 and FY 20 respectively. The target price implies an upside of 35% from the current levels.

Disclaimer: Please take any decision after consulting your financial adviser

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