MEDIUM-TERM INVESTMENTS: CHAMBAL FERTILISERS (70.05)
Chambal Fertilisers & Chemicals, a part of the K.K. Birla group, is a diversified conglomerate having interests in
fertilizers, phosphoric acid, agri-inputs & seeds, agri-biotechnology, textiles, information technology, food processing
and shipping. It is also India’s largest producer of Urea in the private sector.
Attached below is the monthly chart of this counter. Looking at it we can see that prices having formed a nice, primary
rounding pattern during September 2005, slipped into a tight lateral consolidation phase as they were unable to stage
a breakout from the pattern then. Moving sideways, prices kept making attempts to breakout each time but not finding
enough buyers to get the push upward, prices topped out and slipped into a short term decline. This decline, as we
can see on the chart below, managed to hold support around the ascending bottom to bottom trendline region (pink
line) and managed a quick bounce back. But once again they continued to be range bound, waiting for the right
opportunity to rocket out of the pattern and continuously holding support of the trendline. Prices were finally
successful in breaking out during August 2007 and some fantastic moves then onwards led prices to shoot thru the
roof and complete the pattern target. Having hit a high around 94 during December 2007, which it tried to exceed the
following month, prices slipped into a sharp corrective mode along with the other market participants. We can see
that in the same month prices lost about 70% from the top of the entire rise and some quick buys around the dips led
prices to close above the 62% retracement region. Holding support around some crucial levels—62% retracement,
accumulation pattern breakout region, prior top, prices have rocketed once again last week.
The short term charts show that after few weeks of consolidation near the bottom, prices in the last two sessions
have skyrocketed on fresh and aggressive buying activity. With the kind of move we have seen last week, it seems
certain that something new is brewing in the counter and probably in the whole sector, as we saw most of the fertilizer
stocks hogging the limelight. Momentum on all time frames continue to look positive and with the kind of move seen
last week, they have grown stronger and signal some good moves ahead. With the trend looking good for a fresh ride
ahead, we suggest buying now and on dips for a move back to the top around 90-94 / 115-20 / 145-48.