Cultivate Your Trading Plant with this Fertilizer Stock

  • Stock Market Analysis
  • Editors Pick

About the company:

Oil & gas discovered in Bombay High and South Basin triggered eight new generation fertilizer plants to cater to India’s growing food demand. Established in 1962, Gujarat State Fertilizers (NS: GSFC ) & Chemicals Limited manufactures fertilizers and industrial chemicals. The stock is trading very close to its 52-week high level, and the 52-week range is Rs 127 – Rs 58.20.

Technical observations:

One-week time frame: (Chart 1)

On the weekly time frame, GSFCL share has made an Ascending Triangle pattern. In the week of May 3, 2021, the stock broke a strong resistance of Rs 97. Later it consolidated and completed a 52-week high and then again pulled back to the support level of Rs 97. From that level, it has bounced back. We expect the share to break the resistance close to a 52-week high of Rs 127 and sustain above it aided by high volumes. Relative Strength Index (or RSI) is above 60, which indicates positive momentum. Long-term investors should enter once the scrip is established above Rs 127 level. They should maintain a stop loss of Rs 97 (previous swing low) on a weekly closing basis.
One day time frame: (Chart 2)

From the below chart, you should note that GSFCL stock has formed a Rounding Bottom pattern on a daily time frame. After making a low of Rs 98, the share bounced back and is now very close to testing the next resistance level of Rs 125. Heavy volumes support this upward movement, RSI is above 75, and the Moving Average Convergence Divergence (or MACD) line is above the signal line. It also signals positive momentum on the stock. Positional traders should enter at the current level, and they should maintain the stop loss at Rs 108 on a daily closing basis.

We expect GSFCL stock to maintain a positive bias and move higher in the coming trading session. Short-term traders should take a position at current levels and keep a strict stop loss of Rs 118 on a daily closing basis.

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