Trading recommendations - Aug 08, 2005

Ashok Leyland - This scrip was recommended vide our previous editions dtd June 05 & 11, July 02, 09, 23 and 30, 2005 and has achieved the desired results. Click here to view the previous recommendations. The noteworthy aspect about this chart pattern is the strong breakout to the previous top amidst very heavy volumes. The oscillators are supporting the rally and the relative strength is rising ( to understand the importance of relative strength, click here to view the tutorial ) and the scrip is turning into a strong market out-performer. We recommend a re-entry on major declines for the patient traders / investors.

Your call of action -

• Investors / cash segment players - buy at lower levels of 28 and leave room for pyramid style averaging till the 26 mark. A stop loss at the 24 levels is advocated and a profit target of 34 is suggested in the medium term. Over a long term ( 1 year or more ) the stock has the potential to cross the 40 mark.

• Aggressive F&O traders - Buy the September futures ( quoting at Re 0.70 premium to cash ) on declines to the 29 mark and average at the 27.75 levels. A stop loss at the 26.50 is suggested and a profit target of 34 is suggested in the medium term.

• Derivatives contract size - Market lot = 9,550 shares. F&O margin = approx Rs 50,000 (subject to change daily )

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