IGL, MGL: Parikh recommendations may trigger up to 11% rally in gas stocks

Barring Gujarat Gas, other gas related stocks like Reliance, ONGC, MGL, IGL are poised for the next upside

The government appointed committee headed by Kirit Parikh, on Wednesday, proposed capping domestic gas prices in a band of $4- 6.50 per unit. This would relieve the current strain faced by gas distributers and end users. 

According to reports, ONGC will be paid a floor price of $ 4/mmbtu and ceiling price of $ 6.5/mmbtu. The ceiling price will have an annual escalation clause. The committee may not change the existing pricing formula for difficult fields such as KG-D6 of Reliance Industries, PTI reported. Besides, the Committee has also asked the government to remove caps on gas prices in three years.

Following these reports, the S&P BSE Oil & Gas index hit a 52-week high of 20,445.88 on the BSE in intra-day trade on Wednesday. At 01:38 pm; the Oil & Gas index was up 0.73 per cent, as compared 0.12 per cent gain in the S&P BSE Sensex.

Among individual stocks, Indraprastha Gas (IGL), the top gainer among the pack, was up 4 per cent at Rs 451.70 on the BSE. Mahanagar Gas (MGL), Gujarat Gas Company, Oil India, Indian Oil Corporation, Petronet LNG, Bharat Petroleum Corporation (BPCL), Reliance Industries (RIL) and Adani Total Gas from the index gained between 1 per cent and 2 per cent.

Technically, the inclusion of price band on gas price could steer short-term rally in gas-related stocks. 

Here's a low-down for each stock:

Following the development, shares of Mahanagar Gas scaled two-month high. The stock surpassed the Rs 917 mark, and is poised for further upside in the coming sessions. The chart texture reveals an 'Ascending Triangle' breakout that may stretch to Rs 950 and then towards Rs 1,000 levels. The support comes at Rs 880 and Rs 860 levels. Technically, the stock can easily gain 10 per cent. CLICK HERE FOR THE CHART

Indraprastha Gas, on the other hand, gained 4 per cent in the intra-day deals, engulfing the decline of the previous session. Above Rs 450, the stock may rally further, as the selling pressure near the hurdle seems to have softened. The immediate support comes at Rs 430 and Rs 420, with the price action denoting a bullish rally to Rs 480 levels. CLICK HERE FOR THE CHART

Gujarat Gas share, too, are trading in a "Symmentrical Triangle" pattern, suggesting that the stock could breakout once Rs 510 is leaped over. Similarly, on the downside, if the stock fails to show recovery beneath Rs 490, the weakness may take down the positive strength. The volumes have remained sluggish, thus restricting a clear direction in the stock. CLICK HERE FOR THE CHART

With its strong presence in the energy sector, the oil-to-chemical conglomerate Reliance Industries, too, has been witnessing bullish accumulation since the last two days. The stock has gained close to 7 per cent during the same period. Technical charts clearly signify a positive upside over Rs 2,700 level, a level it has struggles to conquer since August this year.  The positive bias is likely to add more gains in the stock, with price likely reaching Rs 2,900 in the coming sessions.  CLICK HERE FOR THE CHART

Shares of Oil & Natural Gas Corporation (ONGC) have been, gradually, mounting post the "Double Bottom" breakout since early November, as per the weekly chart. Overall trend reflects a positive rally to Rs 155, which continues to remain as a major obstacle. Support for the stock comes to Rs 130 levels. CLICK HERE FOR THE CHART