Stock Spurts 8%, Volume Jumps 330%; About to Cross Hurdle!

Despite a flat closing of the benchmark Nifty 50 index, gaining 0.07% to 17,662.15 on Tuesday, volatility still persisted in today’s session. As opposed to a weak market in the first half, the second half witnessed a relatively higher demand as seen from a green sea of numbers. 

Among such counters, one that caught investors’ attention was the share price of Chambal Fertilisers and Chemicals (NS: CHMB ), which is a INR 12,142 crores big fertilizer and agrochemicals manufacturer. After a 27.6% fall in the last one year, the stock is now trading at a lucrative valuation of 7.75 P/E and a dividend yield of 2.57%. 

Image Description: Daily chart of Chambal Fertilisers and Chemicals with volume bars at the bottom

Image Source: Investing.com

Today, Chambal Fertilisers and Chemicals’ shares jumped 7.9% to INR 312.7 as the stock witnessed a buying spree on Tuesday. Today’s rally not just helped the stock to break its 4-day losing streak but also led it to surge to the highest level in the last 20 days. 

Since the last few months, the stock had been trading in a range with a slight bearish tilt. The lower low and lower high formation of the stock is clearly depicting the upper hand of bears over the bulls. However, the tide seems to be turning in the favor of bulls as the stock is now rallying to break an important hurdle of around INR 320, which kept the stock from rising since November 2022. Since then, this resistance had been tested a total of 6 times but the stock couldn’t cross it. 

This time it might be able to surpass this resistance because, prior to this up move, the stock didn’t break its previous low which is an early indication of the changing trend toward the upside. In other words, the stock has just made a higher low which would accompany the higher high (after crossing the previous peak of INR 321) to make an up-trending formation. Also, above INR 318, the stock would break the falling trendline resistance on the daily chart which would further increase the upside momentum. 

The volume on today’s move has been impressive, at 30.7 lakh shares, which is over 330% higher than the 10-day average volume of 8.46 lakh shares, reflecting investors’ enthusiasm to lap up the company’s shares at these lower prices.  All in all, INR 318 - INR 321 is the range above which the trend would turn bullish, till at least INR 340.