Recently, Oil and Natural Gas Corporation Ltd. (ONGC) shares have fluctuated around ₹252 on NSE. The stock has fallen about 12% over the past month. Is a cautious approach or a diversified investment strategy may help mitigate risk in the energy sector.
i would personally go for investing in oil index like OILIETF rather than an individual oil company. based on my research unless you are investing in lakhs in just one company, the dividends dont make sense (not getting sufficient Q to reinvest). also the risk is so much less in an index. just check the holdings of OILIETF -
well distributed and less risky, rebalanced twice a year to downgrade under performers… and so on are some of the advantages. just my personal take.
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Investing in a single stock within a sector can be effective with a bottom-up approach. However, to mitigate risk, diversifying by holding 2-3 stocks in the same sector is a prudent strategy. This doesn’t mean purchasing them all at once; instead, pace your investments as you find value opportunities. ONGC, for example, looks promising.
P.S. I currently hold ONGC.
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kindly explain further.
Instead of buying multiple oil stocks like Reliance, IOC, GAIL, and HPCL all at once when oil prices are down, it’s better to identify which stock offers the best value in the sector. Add others only when they present stronger value opportunities.
I assume Sudeep has a methodology to determine whether a stock is undervalued or overvalued. For example:
- ONGC: P/B ratio of 0.96 (historical range: 0.4 to 1.1) – my preferred pick.
- HPCL: P/B ratio of 1.69 (historical range: 0.9 to 1.6).
P.S.: I’ve been holding ONGC since August 2023, 58 shares @ ₹172.95.
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