Medium term view— Petronet LNG – IDBI Capital
Petronet LNG Ltd, a joint venture company between BPCL, IOC,GAIL and ONGC, was registered in April 1998 for importing LNG and setting up of LNG terminals with facilities like jetty, storage, regasification etc. to supply natural gas for generation of power to both private / public sector power plants.
The setup on the attached weekly chart below is highly interesting. Studying the price history in this counter we find that May 07 onwards prices rocketed out of a primary declining trend. In doing so prices managed to breakout from the 40-period EMA (black curvy line) and with consistent buying, rocketed to highs of 122 by Jan 08. Topping out there prices plunged on heavy profit taking and in just three months time, wiped off about 80% of the prior strong rally.
Recovery from the lows failed to sustain and inviting renewed selling pressure, prices plunged afresh. Rallies continued to attract more and more sellers and this eventually pushed prices to new swing lows, thereby completely retracing all the prior gains. The subsequent rallies during the decline, had made provision for forming fractal accumulation patterns. Moving back to the chart we see that this primary fall ended during Nov end 2008 and prices shifted into forming the base of the accumulation pattern. A steady accumulation for three months kept prices from moving further low and with the market improving last March-April 09, this counter too started rising on increasing buying activity. Completing the first pattern at 65 levels, also the region of 38.2% etracement of the entire prior decline, prices managed an immediate breakout from the same and moved to highs of 82 by June 09. Topping out at this level, prices just fell short of completing the second accumulation pattern at 85-86 levels (black line), also the region of 61.8% retracement of the same swing and slipped into a corrective mode. During the dip, the 40-period EMA came to the rescue of prices and sent them up once again. Though prices since then were moving range bound, they were forming an ascending triangle pattern (green lines). Also the purple line on the chart is a descending trendline resistance that prices have been fighting against. Though prices have multiple resistances to exceed, what still gives us hope is the fact that fractal accumulation patterns are in progress and a bullish pattern of ascending triangle pattern has got completed and is awaiting a breakout. There are enough supports to hold prices up, momentum is strong on all time frames.
With such an interesting setup on the charts, we recommend buying now or dips to 72-71 for target of 98-100 (target of first accumulation pattern) / 121 / 138-40 (second pattern target). Level 63 seems to be a strong support, a break of this should be taken seriously and may threaten open long positions.
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Category: Medium Term
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