India Foils
Coromandel Fertilisers
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Market Price: Rs19
Target Price: Rs330 to 340
Period: 2-3 years
In 1990, India Foils traded at around Rs100. Since then, right until early
2000, it declined steadily and touched its lowest point in the period between
mid-2001 and early 2003 when it formed a base at about Rs4.80 on the monthly
charts. Since then, the stock slowly emerged from its lean years to make a peak
of Rs20.45 on the monthly charts at the end of August 2005. This level had
acted as a resistance once before and as a support level in December 1998 and
October 1999. From the high of Rs20.45 at the end of August 2005, the stock
declined again and formed a base of about Rs eight between 2006 and 2007.
Thereafter, it rose to touch Rs20.65 at the end of December 2007. Here is an
instance of long-term resistance lines holding up after which the stock
declined to about Rs14.70 at the end of March 2008. Since then, it has risen to
its current level of Rs19.55 and is poised to cross the resistance of Rs20.65
even on the weekly charts. This is a long-term rounding bottom play. The key to
trading these patterns successfully is to be patient. The stock may rise to its
previous all-time high of Rs100 when the entire rounding bottom pattern is
completed. But this may take as much as three years.
Market Price: Rs129
Target Price: Rs190
Period: 3 months
This is a short-term play. Coromandel Fertilisers stayed flat until about
mid-2003 when it came out of its base level of Rs12.70 to reach a high of
Rs33.73 at the end of December 2003. The stock then declined to around Rs21 at
the end of March 2004, after which it resumed its rise to reach Rs96.80 at the
end of April 2006. Subsequently, it declined to Rs59.80 at the end of July 2006
and rose again to Rs89.80 at the end of January 2007. Note that it did not
cross its previous high of Rs96.80, indicating a weakening of the uptrend. It
declined to Rs65 at the end of March 2007. Here again the stock did not touch
or cross its previous low of Rs59.80, indicating that there was a distinct lack
of downward momentum.
The stock rose once again; this time, it touched a
high of Rs120.95 at the end of September 2007 convincingly crossing its
all-time high of Rs96.80. Joining the highs of its two previous peaks of
Rs96.80 and Rs89.80 and its two previous bottoms of Rs65.00 and Rs59.80, we get
a triangle, out of which the stock broke through to Rs120.95. From there, the
stock declined to Rs105.85 at the end of October 2007. It rose again, but the
rise was terminated at Rs128 at the end of February 2008. After declining
slightly to Rs117.40, the stock climbed to a high of Rs135.05. The earlier
rally from around Rs65, the subsequent decline in January-February and the rise
thereafter to Rs135.05 makes this a ‘two-step rise’. The stock is now
poised to start another rally that will complete this two-step rise. The rally
should end at Rs180-Rs190 levels in about three months. – Anirban
Banerjee
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