State-run explorer Oil and Natural Gas Corporation (ONGC) overtook Reliance Industries Ltd. (RIL) to become country's largest company by market capitilisation (m-cap). ONGC's m-cap rose to Rs 2.90 lakh crore to pip RIL, which has a m-cap of little over Rs 2.86 lakh crore. Last year, it was Coal India Ltd. that saw its m-cap zoom past RIL. However, RIL soon re-claimed its position as the stock rose from its annual low levels post a share buy-back announcement. ONGC has seen a sharp up move in its share price since government announced a partial de-control of diesel prices earlier this month. In the current subsidy sharing arrangement, ONGC and Oil India Ltd sell crude Oil to Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp at a discount in order to partly compensate for subsidised fuel sales. Post de-control both the state-run companies are likely to see significant gains from a diesel price hike as it would bring down their subsidy burden and allow them to earn more. Similarily, RIL ralled this month due to its better than expected quarterly results.
The diesel de-control was a boost for RIL too. The company, run by billioner Mukesh Ambani, will be in better position to compete if government companies sell fuel at market rates. RIL will also be able to open its petrol pumps that it had to shut. Market experts say, given the sentiment both RIL and ONGC have a potential for a sharp rally from current levels. It would be interesting to see how long ONGC can claim to be the largest m-cap company. RIL has maintained that position for nearly a decade now. The ONGC share price rose 0.44% todat to close at Rs 339. RIL was down 1.39% at Rs 886.