Chart Check: Breakdown from rising channel formation could fuel selling pressure in Chambal Fertilisers

Chambal Fertilisers, which has plunged more than 40% from its recent April 2022 high, is looking weak on the charts.

The stock also gave a breakdown below the rising channel formation in May 2022 and is trading below crucial moving averages which could result in a further selloff.

Short-term traders can look to go short in the stock for a target towards Rs 250 levels in the next 2 months, suggest experts. They can look to sell now or bounce towards Rs 300.

The stock hit a 52-week high of Rs 515 on 19 April 2022, but it failed to hold on to the momentum. The stock found support near Rs 260 levels in July and then staged a bounce back.

The bounce back was short-lived as the fertiliser stock continued to face resistance above Rs 350-360 levels. The stock broke below the crucial 50-DMA earlier in November.


The Relative Strength Index (RSI) is at 36.7. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed. MACD is below its signal and center line, this is a strong bearish indicator.

Nifty is facing resistance at a key level after the upside movement. In the broader market rally, fertiliser stocks like Chambal Fertiliser and Coromandel have underperformed indicating weakness in the sector.

“As Nifty is retracing earlier gains, weak stocks become weaker. Chambal Fertiliser has breached the rising channel on the lower side which was bearish development on the weekly charts,” Kapil Shah, Technical Analyst, Emkay Global Financial Services and Trainer- FinLearn Academy, said.

“The stock has started to respect resistance and disrespect to support. It is a characteristic of weakness. In recent week, the stock has breached the support level,” he said.

On the daily chart, the stock has formed a Head and Shoulder pattern. It is a bearish continuation sign.

“From the oscillator perspective, MACD gave a negative crossover in the negative zone. It indicates a termination relief rally and continuation of a bearish trend,” added Shah.

“Based on the aforementioned rationale, stock offers sell opportunities in the range of Rs 298 to Rs 303 level. Stop loss needs to be maintained at Rs 315 level on a closing basis. The stock has downside potential up to Rs 265 level followed by Rs 250 level. Two months duration is required to pan out the mentioned view,” recommends Shah.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)