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Indraprastha Shares Hit Year-to-Date Highs

Indraprastha Gas share price spiked on Friday by 5.79% to trade at Rs 462.15, as low gas prices continued to support the company’s demand-side outlook. The move effectively returns the stock to the upside after previously seeing its seven consecutive daily wins interrupted on Wednesday and Thursday. Furthermore, IGL registered a year-to-date high of Rs.469.00, underlining the bullish momentum around the gas company.

The Indian government revised downwards prices of domestic natural gas to $9.87 per MMBTU from $9.96 per MMBTU beginning April 1st. This has created an upbeat sentiment around the commodity, with demand expected to grow. India heads to the General Elections in a fortnight, and the gas price cuts are seen in some quarters as a campaign tool. However, the Indian government insists that the move aims at easing pressure on households amid inflationary pressures.

Lower gas prices translates to lower input costs for gas distribution companies. However, it is also notable that India has seen a significant rise in the popularity of electric vehicles, especially in the Delhi capital. This has stirred up concerns that it could eat into the market shares of oil and gas companies like Indraprastha. However, lower fuel prices means that they can remain competitive against EVs.

In the medium and long term, however, the elections could have far-reaching consequences for the Indian oil and gas industry. The ruling Bharatiya Janata Party has set its eyes on transitioning the country to have 50%  of its energy coming from renewable sources by 2030. This could lower margins for fossil fuel companies like Indraprastha.

Technical analysis

IGL share price has its pivot at 450.10, with the buyers in control. However, the upside will only prevail if the price stays above the pivot mark. That could see them break the resistance at 457.20, beyond which the share price could rise to test the psychological resistance at 470.45. On the other hand, a slide below 450.10 will favour the sellers to take control, with support established at 444.15. A continuation of control by the sellers could see further decline to test the next support at 437.50.