UBS Securities, ICICI Securities and Kotak Mahindra Capital have also been selected for the job, according to sources.
As many as 14 merchant bankers made presentations yesterday before the Department of Disinvestment, under the ministry, for managing the ONGC stake sale.
Shares of ONGC were trading at Rs 415, down 3.21 per cent over previous close, on the BSE.
At the current market price, the 5 per cent stake sale or over 42 crore shares, would fetch over Rs 17,000 crore to the exchequer.
The merchant bankers will advise the government on the timing and modalities of Offer For Sale (OFS) and ensure best returns to the government, which holds 68.94 per cent stake in ONGC.
The Cabinet nod for the ONGC stake sale is expected shortly as the Petroleum Ministry has given in-principle approval for the stake sale.
The government had last sold 5 per cent stake in ONGC in 2012 for Rs 14,000 crore.
In the current fiscal the government plans to mop up Rs 43,425 crore from selling stake in various state-owned firms.