Share of oil producing companies to be in spotlight after the Central government slashed the windfall tax on crude oil to zero. Meanwhile, the Brent Crude Oil Futures zoomed almost 7 per cent in the last two sessions following OPEC decision to curtail the crude production last week.
Barring Reliance Industries, other two stocks like Oil & Natural Gas Corporation and Oil India are seen hovering closer to their respective 52-week highs. Reliance Industries, for instance, has been on a downward spiral since December last year, the stock also trades beneath the key 200-day moving average (DMA).
Technically, when a stock reaches a new definitive peak, the trend is observed to rally in the same direction in the following sessions. This could become the case for Oil & Natural Gas Corporation and Oil India.
Here’s the technical outlook amid cut in windfall tax on crude oil:-
Reliance Industries Ltd (RELIANCE)
Likely target: Rs 2,450 and Rs 2,500
Upside potential: 5.50% to 7.50%
The Double Bottom formation on the Reliance Industries shares may provide some relief to the current weakness, as per the daily chart. The stock truly needs to sustain over the horizontal mark of Rs 2,300 for few more sessions, to build ground for any negative reversal.
Furthermore, a trend line breakout over Rs 2,360 could trigger a positive rally in the direction of Rs 2,450 and Rs 2,500-mark, right towards the 200-DMA level. The support for the stocks exists at Rs 2,250 level.
Oil & Natural Gas Corporation Ltd (ONGC)
Likely target: Rs 185
Upside potential: 15%
While the current trend in the Oil & Natural Gas Corporation shares look upward, the strength seems to be lacking follow-up momentum. Once a new 52-week high is reached; which is at Rs 159.70, the trend is mostly likely to witness major support from volume, as the counter sets foot in the next leg of upside.
As of now, the support for the upward trend stays at Rs 145 and once new high is hit, the cushion level may be shifted to Rs 155. The overall trend points to a bullish phase and appears to be on the course, unless the 200-DMA is breached.
Oil India Limited (OIL)
Likely target: Rs 300
Upside potential: 14%
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