Goldman downgraded Indian Oil Corp and Hindustan Petroleum Corp to "sell" from "neutral" and Bharat Petroleum Corp to "neutral" from "buy."
The investment bank said government-owned upstream companies are better placed then downstream ones because of more "stable" cash flows and "attractive valuations."
Goldman retained Oil & Natural Gas Corp with a "buy" rating and upgraded Oil India to "neutral" from "sell".
Turning to gas sector, Goldman said it expected the gap between supply and demand to widen due to production declines at KG-D6 blocks, leading to further imports of LNG.
It upgraded Gujarat State Petronet to "buy" from "neutral" on "attractive" valuations and "likely positive surprise" on regulated transmission tariffs.
Goldman maintained "buy" rating on Cairn India citing "high oil leverage and best production growth profile among peers."
Lastly, Goldman maintained "buy" ratings on Reliance Industries and Essar Oil as it expects refining margins to improve during H2 2012.
Copyright Thomson Reuters 2012