Zuari Agro Chemicals Stocks Surged 10% in One Session!

During the final trading session of the week, the Nifty index started negatively influenced by global cues. However, it managed to recover from initial losses and reached a new all-time high. Following this remarkable achievement, a sudden wave of profit booking caused a sharp decline, and the index is currently trading near its lowest levels of the day. Nevertheless, amidst this market weakness, one particular stock from the chemical sector displayed significant strength by surging over 10% with strong volumes. This surge marked the breakout of a nearly 60-week consolidation pattern. 

The spotlight is on Zuari Agro Chemicals Ltd., a company engaged in the manufacture, trade, and sale of chemical fertilizers, water-soluble fertilisers, seeds, pesticides, and fertilizer products. The company markets its range of products to farmers across the country under the brand name Jai Kisaan. Founded by Krishna Kumar Birla in 1967, the company is headquartered in Bangalore, India. 

Since reaching its peak of Rs 218.85 in mid-April 2022, the stock has been consolidating within a broad range of Rs 218.85 on the upper side and Rs 116 on the lower side. Interestingly, the lower end of this consolidation range aligns with a retracement support level of over 61.8% from the last impressive rally that began in March 2020, at the level of Rs 43.25, as visible on the weekly chart. In the most recent trading session, the stock witnessed strong buying interest, resulting in an upward movement from the support of the 5-week moving average (5WMA). 

By drawing a trendline connecting the highs of April 2022 (Rs 218.85 level) and October 2022 (Rs 197.65 level), we can identify a breakout trendline representing a consolidation pattern lasting nearly 60 weeks. Interestingly, in the current week, the stock is trading just below the trendline and closed around the same level. A close above this trendline level (Rs 175 level) on a weekly basis will confirm the breakout. After the breakout, the stock could potentially rise to Rs 220, representing a gain of approximately 25% from the breakout level (Rs 175 level). 

Swing traders and short-term investors should consider adding this stock to their watchlist.