Mahanagar Gas slashes CNG and PNG prices but Street remains unimpressed

Mahanagar Gas shares slipped on Wednesday as investors on Dalal Street failed to cheer the cut in kitchen and automobile fuels — Piped Natural Gas (PNG) and automobile fuel Compressed Natural Gas (CNG) — announced by the gas distribution company last evening.

Mahanagar Gas shares fell close to 4 percent in early deals and were trading 1.75 percent lower, from the previous close, at Rs 909.85 on BSE at 11:10 am. This, even as the stock has gained nearly 12 percent in the last five days as against the benchmark Sensex which has risen 2.5 percent during the period.

The downtrend comes a day after the company slashed the prices of kitchen fuel PNG by Rs 4 per standard cubic metre to Rs 48.50 per SCM while that of CNG by Rs 6 a kilogram to Rs 80 per kg.

This is following an increase in the allocation of domestically produced natural gas from the government.

CNG vehicle owners will be able to save 48 percent on fuel costs in Mumbai post the rate revision. In the case of PNG users, the savings will be 18 percent when compared with the most used alternative Liquified Petroleum Gas (LPG), Mahanagar Gas Ltd (MGL) said.

IGL shares too were trading 1.22 percent lower at Rs 432.70 after having fallen nearly 3 percent intraday.

Meanwhile, on the global front, oil prices rose in today’s trade recovering from six-month lows hit the previous day, as a larger-than-expected drop in US oil and gasoline stocks reminded investors that demand remains firm if overshadowed by the prospect of a global recession.

"A drawdown of US gasoline stockpiles for a second straight week has reassured investors that demand is resilient, prompting buys," Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd told news agency Reuters.