Reuters Market Eye - CLSA downgrades Oil and Natural Gas Corp to "underperform" from "outperform".
The brokerage also cuts Indian Oil Corp and Hindustan Petroleum Corp to "sell" from "underperform".
CLSA says the rally in these state-owned stocks on the back of hopes for a hike in fuel prices is overdone, given any "sweeping" changes to pricing would be hard to implement in a "very busy" political calendar in 2013.
The brokerage adds Indian Oil and HPCL could see higher under-recoveries from a weaker rupee, while ONGC could see the government limit its subsidy burden in 2013.
IOC is down 0.3 percent, HPCL is down 0.6 percent, while ONGC is up 2.6 percent.
(Reporting by Abhishek Vishnoi)