CGD firms: Mahanagar Gas, IGL, Adani Total may add another 16%, charts show

Shares of gas distribution companies have being in focus on expectations of rise in demand, coupled with a favourable outcome from the Kirit Parikh report.

Shares of City Gas Distributions (CGD) were in focus lately, as they awaited an outcome report from the government-appointed panel, headed by former planning commission member Kirit S Parikh. 

Even as the panel sought more time to submit its report, shares of CGDs were seen trading with robust gains yet again on Wednesday. According to sources, the panel has sought more time as it does a tightrope walk of striking a balance between the expectations of producers and consumers.

According to the oil ministry order, the Kirit panel has been asked to recommend a fair price to end-consumers and also suggest a "market-oriented, transparent and reliable pricing regime for India's long-term vision for ensuring a gas-based economy." READ MORE

Further, analysts expect overall gas demand from the CNG (Compressed Natural Gas) and DPNG (Domestic Piped Natural Gas) sectors to grow at 15.7 per cent CAGR over FY22-27 supported by aggressive expansion in infrastructure.
 

Among individual stocks, Adani Total Gas was up 2 per cent, while Mahanagar Gas and  Petronet LNG gained 1.8 per cent and 1.5 per cent, respectively.  Indraprastha Gas and Gujarat Gas also held marginal gains. Meanwhile, the key benchmark indices - the BSE Sensex and Nifty 50 declined around 0.8 in early trade this morning.

So far this month, Guajart Gas has gained 10 per cent, Indraprastha Gas has advanced 3 per cent. Earlier in August,  Indraprastha Gas had soared 21 per cent, followed by Adani Total Gas up 19.70 per cent and Mahanagar Gas up 17.50 per cent.  Gujarat Gas too added 6 per cent.
 

Here’s the technical outlook on gas distribution stocks for the latter part of the year: -

Mahanagar Gas Ltd (MGL)

Likely target: Rs 1,000

Upside potential: 16%

The “Double Bottom” formation that the stock broke out from in August 2022 has helped bulls to strengthen the positive bias, shows the weekly chart. This formation reveals a bullish upside as the stock resiliently reversed after making two bottoms. While the present momentum has slipped lower to the breakout range of Rs 850 to Rs 830, the medium-term outlook hints at a gradual up move to Rs 1,000-mark. The support for the stock comes at Rs 780 level. CLICK HERE FOR THE CHART

Adani Total Gas Ltd 

Likely target: Rs 4,000

Upside potential: 14%

While there seems to be a firm cushion for the stock at Rs 3,200, only a breakout over Rs 3,500 level could instil further up move for the Adani Total Gas stock, indicates the daily chart. Nevertheless, the remarkable move so far this year that doubled the investor’s gains continues to remain buoyant. A breakout over Rs 3,500 could see a next leg of up move to a new historic peak of Rs 4,000-mark. CLICK HERE FOR THE CHART

Petronet LNG Limited (PETRONET)

Outlook: Obstacle at Rs 230

On a broader perspective, the shares of Petronet LNG require to take out the barrier at Rs 230 level. This hurdle has given a tough time to the stock since mid-May 2022. While there are favourable candlestick patterns like Bullish engulfing, Morning Star and large green candles, the volumes are yet to take a speedy rise, reveals the weekly chart. As of now, the support for the stock exists at Rs 190 level.  CLICK HERE FOR THE CHART

Gujarat Gas Limited (GUJGASLTD)

Likely target: Rs 539 and Rs 585

Upside potential: 5% to 13%

Post rising above the 50-day moving average (DMA) in early August 2022, the shares of Gujarat Gas managed to cross 100-DMA. Therafter the stock has held the support of 50-DMA, currently set at Rs 478. Now, the stock is rallying to Rs 539, which is the 200-DMA and if it manages to scale over, the breakout could enter a medium-term bull run leading to Rs 585 level. CLICK HERE FOR THE CHART

Indraprastha Gas Limited (IGL) 

Likely target: Rs 460 and Rs 480

Upside potential:  9% to 13%

Indraprastha Gas witnessed a breakout from a sideways consolidation pattern on the weekly chart. This move was supported by robust gap-ups on the daily setup. The optimistic trend is now headed towards Rs 460 and Rs 480 levels, which are the next resistances. The Moving Average Convergence Divergence (MACD), a momentum indicator, has risen over the zero line, suggesting a positive underlying momentum. The immediate support for the stock appears at Rs 400 and Rs 375 levels. CLICK HERE FOR THE CHART