ONGC gains on broker upgrades

Oil and Natural Gas Corporationshares gain 0.86 percent after Barclays and Credit Suisse upgrade the state-run refiner, citing valuations and upside to earnings.

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ONGC shares have lost 20 percent since mid-May on concerns a weakening rupee would make oil imports more expensive.

Credit Suisse says the government's gradual increase in fuel prices can be "a catalyst" for earnings, and upgrades the stock to "outperform" from "neutral".

Yet Credit Suisse says at current valuations ONGC shares are pricing in no net gains from higher gas prices, lower government subsidy payments, minimal diesel price hikes and crude prices remaining at current levels in rupee terms.

Barclays upgrades ONGC to "overweight" from "equal weight", while raising its earnings-per-share forecasts for fiscal 2014/2015 to 2015/2106 by 8 to 14 percent to factor in higher gas prices.

Barclays adds lower retail fuel under-recoveries could even lift earnings further. The BSE Sensex is down 0.62 percent, while the Nifty falls 0.72 percent.