We present the reach of the proposed INO-ICAL in measuring the atmospheric-neutrino-oscillation parameters theta_{23} and Delta m^2_{32} 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 five-year exposure of the 50 kton ICAL detector. We find a mean resolution of Delta chi^2 = 2.9, which rules out the wrong mass hierarchy of the neutrinos with a significance of approximately 1.7 sigma. These results on mass-hierarchy are similar to those to presented earlier studies that approximated the performance of the ICAL detector.