IGL, Gail, MGL: Trading strategies for CGD stocks post new gas tariff order

Indraprastha Gas stock is seeing a strong resistance at 490 levels on weekly charts. If it manages to breach this level decisively, then the upside may see a rally towards Rs 525 and Rs 555 levels

Stocks of City Gas Distribution (CGD) firms were on a roll on Friday after sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB) issued gazettes of CGD access code, CGD-CNG transportation rate and gas pipeline unified tariff regulations.

PNGRB on Thursday simplified the country's gas pipeline tariff structure to make the fuel more affordable for distant users and to attract investment for building gas infrastructure. The regulatory board has notified regulations for a 'unified' tariff structure for over a dozen pipelines that form the National Gas Grid which will lead to a 20-30 per cent rise in transportation charges paid by users near the source but a reduction for consumers in the hinterland. READ MORE

According to analysts at ICICI Securities, the unified tariffs will encourage gas transmission companies to set up new pipelines and will result in long term volume growth. Companies like Gail and GSPL will benefit in terms of higher tariffs and profitability.

Among individual stocks, Gujarat Gas soared 19 per cent to Rs 411 on the BSE on the back of heavy volumes. Indraprastha Gas, on the other hand, was locked in the 10 per cent upper circuit at Rs 492. Meanwhile, Mahangar Gas surged 10 per cent to Rs 1,023, Adani Gas gained 9 per cent to Rs 345, Gujarat State Petronet (GSPL) added 18 per cent to Rs 243, and Gail was up 4 per cent to Rs 107 in the intra-day trade today. READ MORE

Here's how the stocks look on charts:

Indraprastha Gas Limited (IGL): The stock is seeing a strong resistance at 490 levels on a weekly scale. However, if it manages to breach the level decisively, then the upside may see a rally towards Rs 525 and Rs 555 levels. The Moving Average Convergence Divergence (MACD) has crossed the zero line on the higher side, indicating that the positive sentiment may push the prices to higher levels in the near future. The trend looks promising as long as it doesn't breach the support zone of Rs 460 levels. CLICK HERE FOR THE CHART
 
GAIL (India) Limited (GAIL): This stock needs to resist the selling existing in the range of Rs 108 to Rs 111 levels. The current move indicates an optimistic outlook that has a support of Rs 97 levels. The Relative Strength Index (RSI) has broken out of the consolidation range of 42 to 37 values, suggesting underlying strength  in the stock. Moreover, any correction in the stock is likely to be bought-into. CLICK HERE FOR THE CHART
 
Adani Gas Ltd (ADANIGAS): The Adani Group stock has witnessed mild correction around Rs 360 levels. That said, daily charts suggest that the upside bias may see a strong rebound if the stock holds the support of Rs 300 levels. The RSI is in the overbought condition, yet the stock is not exhibiting any major sell-off. A firm rally above Rs 360 may open uncharted territory of Rs 400 levels. CLICK HERE FOR THE CHART
 
Mahanagar Gas Ltd (MGL): The range of Rs 1,050 to Rs 1,100 has become the resistance zone for the stock, as per weekly chart. Any breakout above this range may push the stock towards Rs 1,250 to Rs 1,400 levels over the medium-term. CLICK HERE FOR THE CHART
 
 
Gujarat Gas Limited (GUJGASLTD):  A firm breakout from the consolidation range of Rs 330 to Rs 280 has resulted in an upside rally. If the stock manages to decisively stay above Rs 360 levels on a closing basis, the up-move may see a rally towards Rs 400 and Rs 450 levels. CLICK HERE FOR THE CHART