Shares of major Indian oil marketing and refining companies experienced significant volatility during Monday's trading session on the Bombay Stock Exchange (BSE). This market movement came in direct response to geopolitical tensions flaring up over the weekend, following a US military strike against Venezuela on Saturday, January 5.
Market Reaction to Geopolitical Shockwaves
The trading day saw dramatic swings for key players. Reliance Industries' share price soared to a historic peak of ₹1,611.20, marking an all-time high. However, the stock could not sustain these levels, retreating by over 1% to hit an intraday low of ₹1,588.70. In contrast, Oil and Natural Gas Corporation (ONGC) witnessed a decline of over 2%, dropping to an intraday low of ₹235.75. This fall occurred after the stock had initially gained more than 2%, reaching a high of ₹246.55 earlier in the session.
The broader BSE Oil and Gas index closed the session 1% lower, effectively erasing the nearly 1% gain it had posted the previous day. The primary driver behind this sell-off in oil stocks is the fear that the conflict between the US and Venezuela could destabilise global crude oil markets. Venezuela is reported to possess the world's largest known oil reserves, and any prolonged disruption to its exports could have serious ramifications for supply.
Interestingly, while crude oil prices themselves traded lower on Monday, analysts express concern that an escalation in the US-Venezuela standoff could morph into a wider geopolitical crisis. Such a scenario would likely reverse the trend, sending crude prices soaring and consequently squeezing the profit margins of oil refining companies.
Divergent Impact on Industry Giants: Expert Analysis
Market experts point out that the implications of this geopolitical risk premium will affect Reliance Industries and ONGC in distinctly different ways. According to Seema Srivastava, Senior Research Analyst at SMC Global Securities, the impact on ONGC is more direct.
"Higher and more volatile Brent prices directly enhance upstream realisations, supporting revenue, EBITDA, and cash flows across its domestic and overseas production portfolio. ONGC’s earnings visibility improves as crude firms," Srivastava explained. She added that while risks like government intervention exist, ONGC currently offers investors direct leverage to sustained oil strength, making it a tactical beneficiary of supply disruptions.
The analysis for Reliance Industries is more layered. Srivastava noted that high crude prices driven by supply risks can be neutral or slightly negative for standalone refining margins due to increased feedstock costs. However, she highlighted a critical nuance: tensions involving Venezuela typically widen the price differential for heavy sour crude. This scenario benefits sophisticated refiners like Reliance, which are equipped to process these discounted crude grades efficiently.
Furthermore, any significant cut in Venezuelan exports could tighten global fuel supplies, potentially boosting refining and marketing margins for products like diesel and jet fuel. Srivastava also emphasised that Reliance's valuation is increasingly anchored by its consumer businesses—Jio and Retail—which remain insulated from oil market volatility.
"From a portfolio perspective, ONGC provides more direct upside to geopolitical crude strength... Reliance, by contrast, offers resilience," Srivastava concluded, stating that the two stocks present complementary exposures for investors.
Technical Outlook for Key Stocks
Technical analysts provided charts and near-term projections for both stocks. For Reliance, Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi, pointed to steady bullish traction. He identified a cup-and-handle breakout on the monthly chart, suggesting sustained upside potential. Patel advised traders could look for an upside target of ₹1,680, with a stop loss at ₹1,510.
Aakash Shah, a research analyst at Choice Broking, noted that Reliance has broken above a key resistance zone near ₹1,580–1,585, confirming the uptrend. He sees the stock having the potential to move towards ₹1,700 in the near term, with crucial support at ₹1,555.
For ONGC, Patel observed selling pressure near highs and indicated that a sustained close above ₹242 is needed to confirm bullish momentum. Hitesh Tailor, a technical research analyst at Choice Broking, highlighted that the stock has found strong support near its 200-week EMA. He suggested the ₹210–220 zone could be favourable for long-term investors looking to accumulate, while resistance is seen around ₹260–280.
The events of Monday underscore how global geopolitical flashpoints can trigger immediate and varied reactions in the Indian equity market, particularly in the sensitive energy sector. Investors are now closely watching the evolving situation between the US and Venezuela for its next ripple effects.
