Deepak Fertilizer, GSFC: Fertilizer stocks may soar 16% on subsidy push

A sharp rally in fertilizer stocks on Thursday on hike in subsidy has opened doors for more upside in the coming days

Fertiliser stocks gained ground at the bourses on Thursday after the Centre increased its share of subsidy for di-ammonia phosphate (DAP) by 140 per cent from Rs 500 to Rs 1,200 per bag, translating into reduction of market price of DAP from Rs 2,400 per bag to Rs 1,200 per bag. The cost to the government would be around Rs 14,775 crore.

According to a note by ICICI Securities, reduction in prices would benefit farmers while there will be increase in the subsidy burden on the company. However, it does not expect it to have a major impact on the balance sheet of fertiliser companies.

Nonetheless, Chambal Fertilisers & Chemicals, Rashtriya Chemicals & Fertilizers (RCF), Deepak Fertilisers & Petrochemicals Corporation, Coromandel International, Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) and Gujarat State Fertilizers & Chemicals (GSFC) gained in the range of 3 per cent to 9 per cent on the BSE. READ ABOUT IT HERE

But will the rally continue? Here's what charts say:

Chambal Fertilizers & Chemicals Limited (CHAMBLFERT)

Likely target: Rs 330

Upside potential: 11.11%

After crossing the resistance of Rs 270-mark, the stock's outlook has turned optimistic for the upcoming sessions. The breakout move led to the counter witnessing firm buying momentum even in the overbought category of Relative Strength Index (RSI). The overall medium-term outlook remains positive wihth a rally expected towards Rs 330 levels. The immediate support comes at Rs 270 levels. CLICK HERE FOR THE CHART
 
Gujarat State Fertilizers & Chemicals Limited (GSFC) 

Likely target: Rs 135 - Rs 140

Upside potential: 10.66% - 14.75%

With a formation of "Higher High, Higher Low", the stock is set to climb higher levels, as per the weekly chart. The lower rising trendline offers support to the stock at Rs 85 levels over the medium-term. Going forward, as the counter has surpassed minor resistance of Rs 110, an upside breakout may see rally towards Rs 135 and Rs 140 levels. The immediate support comes at Rs 115 and Rs 110 levels. CLICK HERE FOR THE CHART
 
Coromandel International Limited (COROMAMDEL)

Likely target: Rs 850

Upside potential: 5.59%

The stock of this Secunderabad-based company needs to conquer Rs 850-mark decisively to breakout from a medium-term perspective. That said, the immediate trend will remain positive as long as it manages to defend Rs 790 levels, as per the daily chart. The current support falls at Rs 760 and Rs 780 levels. While the chart shows a trendline breakout, the stability above Rs 790 will decide the positive sentiment.  CLICK HERE FOR THE CHART

 
Deepak Fertilisers & Petrochemicals Corp. Ltd (DEEPAKFERT)

Likely target: Rs 330 and Rs 350

Upside potential: 9.63% - 16.28%            

The breakout above "Inverse Head and Shoulder" pattern has resulted in a sharp upside towards the Rs 300 mark, as per the monthly. This chart pattern breakout provides a bullish cushion to the stock for the medium-term. Till it defends the support of Rs 275 levels, the bullish bias is expected to result in a rally towards next resistance levels of Rs 330 and Rs 350. The monthly Moving Average Convergence Divergence (MACD) has conquered the zero line, suggesting an upward direction for the coming months. CLICK HERE FOR THE CHART

 
Gujarat Narmada Valley Fertilizers and Chemicals Ltd (GNFC)

Likely target: Rs 450 (after the breakout above Rs 425)

Upside potential: 5.88%

After crossing the resistance of Rs 340 levels, the stock rallied sharply towards the prevailing resistance of Rs 420-425 range. The immediate support comes at Rs 380 levels. A breakout above Rs 425 trigger next leg of rally towards Rs 450 levels, as per the daily chart. CLICK HERE FOR THE CHART