Tech View: Can high fuel prices, weak crude spark a rally in OMCs?

OMC shares traded mixed with HPCL and IOC down 1 per cent and BPCL marginally in the green

Oil Marketing Companies (OMCs) hogged the limelight in Tuesday's session after Finance Minister Nirmala Sitharaman said the Centre had little room to cut excise duty on petrol and diesel. READ MORE

Further, crude prices also remained weak, boding well for the OMC stocks. Yet, the shares traded on a mixed note. While Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) shed nearly 1 per cent each, Bharat Petroleum Corporation traded in the green on NSE in afternoon trade.

On tech charts, the Brent Crude struggled to cross immediate resistances. The recent reversal in Brent Crude prices saw them nearing the support of $67.50 to $67.40 a barrel but an aggressive upside was not seen. Even on a weekly scale, the Brent Crude is trading over 1 per cent down after witnessing massive volatility last week. The inability to cross $72 a barrel may result in a breach of crucial supports resulting in a breakdown, which can hurt the sentiment negatively.

Amid this backdrop, are the OMC stocks in for an upside? Here's what tech charts suggest:

S&P BSE OIL & GAS

Outlook: Sideways movement with positive inclination

The current movement of the Oil and Gas index shows a sideways trend with an inclination of an upward bias. The index is hovering around its 100-days moving average (DMA), placed at 15,759 levels. The support comes at 15,000 mark, which is its 200-DMA. As long as this moving average is upheld, the index may breakout above the resistance of 50-DMA, placed at 16,155 and rally in the direction of 16,600 levels, which is the next resistance, according to the daily chart. CLICK HERE FOR THE CHART

Bharat Petroleum Corporation Ltd (BPCL)

Likely target: Rs 485 and Rs 500

Upside potential:  4% to 7%

A decisive break above the resistance level of Rs 462.25, also its 50-DMA, could push the stock towards Rs 485 and Rs 500 levels. This move will be supported by the Moving Average Convergence Divergence (MACD), which is on the verge of crossing the zero line, suggesting a firm momentum in the upward direction. The overall trend reveals a positive sentiment as the breakout gains are on rising volumes. The immediate support comes at Rs 453 levels. CLICK HERE FOR THE CHART

Indian Oil Corporation Ltd (IOC)

Likely target: Rs 116 and Rs 121

Upside potential: 7% to 11%

Once India Oil conquers its 50-DMA actively, situated at Rs 108.40 level, a rally towards Rs 116 and Rs 121 levels is likely. The Relative Strength Index (RSI) is favouring the upward bias with its "Inverse Head and Shoulder" breakout, as per the daily chart. The support comes at Rs 103, which is its 100-DMA. CLICK HERE FOR THE CHART

Hindustan Petroleum Corporation Ltd (HINDPETRO)

Outlook: minor weakness, needs to hold 200-DMA

The stock witnessed a gap down session after its ex-dividend date and also breached its 50-DMA, placed at Rs 282.70 levels, considered to be the major support in an uptrend. The MACD is trending downwards, below the zero line, suggesting a weakness in reversal, if any. One can expect the counter to hold the downside near Rs 244 levels, which is its 200-DMA. CLICK HERE FOR THE CHART