Wednesday, October 5, 2011

Chambal Fertilizers - 05-Oct-2011

Chambal Fertilizers - Fallen Off The Cliff 

When broader markets have corrected by more than 20%, Chambal has outperformed by rallying 60% in past 3 months. From levels of 70 in June'11 to around 118 in September. Fundamental reason for the rally being the news of Urea De-control by the government. As the news came out that decontrol process may be delayed. The traders started moving out of the stock & it has started correcting from 115 levels to current levels of 90.

88-90 is an important zone for Chambal, where there has been multiple resistances at the past, now these would act as support. Also 89 levels are 61.8% retracement levels from the   top of 118. if 88-89 is breached on closing basis then it can head to its important & much stronger channel support of 79-80 (See in next chart).




Chambal Fertilizers - 6 Months Daily Chart



The below Chart is a long term Chart (5 Years) of Chambal Fertilizers. Its moving in a Upward Trend Channel (Trend Channel range of 40). As per this chart 79-80 is a crucial support for Chambal. 

Chambal Fertilizers - 5 Years Daily Chart



79-80 can become a good entry point to even Long Term Investors. Urea Decontrol may decide the next move of the stock.
Keep a strict stop loss of around 75 for any long term investments that would be initiated at around 78-80 levels.

Market Wisdom: If a stock is in strong uptrend more often than not it bounces from this long term trend lines.


Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.

No comments:

Post a Comment