Chambal Fertilisers and Chemicals

We recommend a ‘sell' in the stock of Chambal Fertilisers and Chemicals from a short-term trading perspective. The stock is in a medium-term correction from the peak of Rs 74.2 recorded on February 19. The counter-trend rally from March 16 low of Rs 57.1 halted on Tuesday and the sharp 3 per cent cut received in the last trading session has resulted in a evening star pattern in the daily candlestick chart that is a top reversal pattern. That the rally could retrace less than 61.8 per cent of the previous down-move also underlines the negative outlook for this stock for the near-term.

The 10-day rate of change oscillator reversed lower on Wednesday and is nearing the zero line in the bullish zone denoting sagging momentum. The relative strength index in the daily chart is also reversing lower in the bullish zone implying that the short-term uptrend could be over. The stock could decline to Rs 62.3 or Rs 61 in the upcoming sessions. Short-term traders can therefore sell the stock with the stop at Rs 65.

via BL