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Abstract We present the reach of the proposed INO-ICAL in measuring the atmospheric-neutrino-oscillation parameters $$\theta _{23}$$ θ23 and $$\varDelta m^2_{32}$$ Δm322 using full event-by-event reconstruction for the first time. We also study the fluctuations arising from the low event statistics and their effect on the precision measurements and mass-hierarchy analysis for a 5-year exposure of the 50 kton ICAL detector. We find a mean resolution of $$\varDelta \chi ^2 \approx 2.9$$ Δχ2≈2.9 , which rules out the wrong mass hierarchy of the neutrinos with a significance of approximately $$1.7\sigma $$ 1.7σ . These results on mass-hierarchy are similar to those presented in earlier studies that approximated the performance of the ICAL detector.