The Professional Ticker Reader

These are stocks that we expect to out-perform the markets. Cash and derivative strategies are advised thereon. Please stay online to enable loading of graphics from our servers. Please also read the trading tips section at the end of the newsletter.

ACC - This cement major was recommended in our edition of Aug 01 & Aug 08 - the trades were also repeated in the daily editions with profitable results. The cement sector has been on the roll and the market expectations of higher off take post monsoons are a big trigger. The boom in the housing market along with a thrust on infrastructure spending are other reasons. Should the markets see a downward correction, the 13 day SMA is expected to provide short term support at the 210 levels. Conversely, expect the 222 levels to be a trend determinator on the upsides.

Bharat Forge - This auto ancillary major has been a frequent recommendation in our flavours edition since May 03 when the price was at 300 levels. The counter was recommended again in our 4/7/03, 11/7/03, 18/7/03, 25/7/03, 1/8/03 & 16/8/03 editions. The counter has returned excellent profits on investments and is still a good buy on declines. We expect the 500 mark to be reached in the near future in a conducive market. The noteworthy aspect about this chart is the fall from the 459 levels to test the 30 day SMA Though a good support by itself, we expect the counter to have excellent short term buying support at the 380 levels. This level is the 33 % retracement of the entire upmove and as per the Dow theory, should see a bounce-back. We reiterate a buy on the counter.

BHEL - This PSU major is quoting at it's highest levels since July 1999 levels and the weekly and monthly charts are showing a saucer formation with a classic bullish formation. This counter is a market out-performer and has a high relative strength ( 350 % ) as compared to the Sensex. That makes this a good investment grade scrip. We advocate a buy for the lower risk appetite investor and the fixed income players.

BPCL - This PSU refining major was recommended last week as it was recovering lost ground after the disinvestment was reported to be postponed. The scrip had left an open gap on the downside and the oscillators were showing a fair probability of revival. That bullish call has been highly profitable as the stock was recommended for buying above the 293 levels. The positive news is the diversification from refining into the exploration business which is highly profitable. The company also has plans for retail forays. The stock is due for disinvestment and is trading at 16 month highs and is unlikely to see major resistance barring some profit taking. We advocate a hold at current levels / buy on declines. This counter would make a good fixed income play.

Bharati Tele - This private sector telecom major is in an uptrend and has appreciated significantly since the last 7 weeks and is likely to see further appreciation as the telecom space witnesses improved prospects. We recommend a buy on declines in small quantities.

Cipla - This domestic pharmaceutical major has been making steady gains as the 200 day SMA is now surpassed. The counter has signalled a breakout as the previous resistance levels have been overcome and the oscillators are signaling a continuation of the upmove. Should this counter maintain levels above 900 consistently, expect greater appreciation. If the markets turn volatile, the pharmaceutical sector witnesses buying due to the sector being a defensive play. In such a scenario, expect 940 - 950 levels. We recommend a buy on the counter.

Dabur - Last fortnight, this domestic pharmaceuticals / FMCG major was recommended at 60 levels ( which has yielded a 10 % profit in a week ) as it is recouping lost ground as the company is reinventing it's business focus. The "Real" brand of juices are re-launching with a renewed focus and the management reports foray into the oncology ( cancer ), ayurvedic formulations and personal care products. Professional management has been inducted and the company should see improved margins in the coming quarters. The markets are cheering the change in outlook way ahead of the results. The stock has appreciated 40 % in 3 months and will see further upsides in the near futures. The bullishness in the pharmaceutical sector will see improved valuations on this counter also. We re-iterate a buy on this counter for a patient investor.

Gas Authority - This PSU gas major was recommended as a buy between 112 - 118 and was triggered on 5/8/03 & 6/8/03. Those positions are deeply in the money. The scrip is in an intermediate uptrend as the stock has gained over 50 % in the last 15 weeks. The recent media reports of de-regulation of the gas sector is likely to see free pricing ( upward revision ) of natural gas prices. The other positive trigger for the stock is the carriage of fibre optic cable along it's gas grid in Rajasthan & Gujarat, which will result in additional revenues for the company. A buy in small lots for PSU stock enthusiasts. The oscillators are signaling a bullishness in the short / medium term. Should this counter make a consistent closing above the 140 levels, expect the counter to witness an accelerated upmove.

Glaxo Pharmaceuticals - This pharma MNC major was recommended by us on 4/7/03 and 18/7/03 in the flavours edition at the 360 levels and has returned a solid 10 % profit within a month. This company has been restructuring aggressively and will be the biggest beneficiary of the EMR / IPR regime post 2005. The 13 & 30 day SMA's are good short term supports and the scrip can be bought at these levels for delivery purposes. Once this counter makes a close above the 428 on a consistent basis, expect the rally to accelerate. Any volatility in the broader markets is likely to help this counter as defensive buying emerges in the pharma stocks in turbulent times.

HPCL - This PSU refining major is in a major uptrend as the positive news flow of the disinvestment and foray into retail marketing trickles in. The company is also launching a premium branded fuel which will cater to the new age high compression automobiles in the premium segment. That business being that of higher margin realisation, the stock is undergoing bullishness. The weekly graph shows a breakout above the previous top and a likely continuation of the uptrend as long as there is no unexpected negative news. The oscillators seem to support the upmove. We recommend a buy on the counter.

ICICI Bank - This private sector bank is on a roll as the scrip has given a very strong breakout above it's major congestion levels - that too a double top on the weekly charts. Should the counter manage to keep closing above the 170 mark, we expect a further upmove in the near term. The stock is a market out-performer and has a very high relative strength ( 362 %) as compared to the Sensex. That makes this scrip a good investment buy.

Infosys - This software bellweather has seen a revival in the last 3 weeks and the same is aided by the bullishness in the Nasdaq. There are positive reports emanating from the international markets about corporate I.T. spend and that may see higher valuations in the coming weeks. The 200 day SMA is a very meaningful resistance for this counter and the same is poised at the 3800 levels. The oscillators are signalling a possible bullishness once these levels are surpassed. We recommend keeping a close watch on this counter for a breakout. Buying is recommended above the breakout point.

IPCL - This petrochem major is in an uptrend and has historically taken support at the 30 day SMA which is validated since the last 14 weeks. The oscillators are supportive of the upmove and the previous resistance levels of 135 levels have been surpassed. Should the scrip close above the 135 levels for the next 2-3 sessions, expect a fresh upmove. We recommend a buy in small lots.

Mastershares - this counter has been recommended since May this year and has appreciated from the 10 Rs levels to Rs 13 - a good 30 % return with limited downsides. As we have been advocating, this is a good bet for returns conscious investor. As long as the markets remain in an uptrend, we expect this scrip's NAV to rise and a commensurate rally in the market price. We put out a buy on declines as a major appreciation has already occurred.

ONGC - this counter was recommended by us last fortnight via SMS at 480 levels and has paid handsome rewards to bulls as it has appreciated over 95 rupees in 2 weeks since then. The positive kicker has been the retail plans by the company and expected liberalisation in the gas pricing. The oscillators are pointing towards a rally and support fresh bullish positions on the counter - albeit on declines. We expect the scrip to see the 600 - 610 levels in the foreseeable future.

Ranbaxy - this company has everything going for it - robust exports, new drug discoveries and institutional interest in the scrip. We have been regularly advocating a buy for the patient investor and re-affirm our faith on this counter. The scrip has broken out of the immediate resistance and the oscillators are signaling a bullishness on this counter. The stock has a high relative strength and that makes this counter a good investment.

Reliance Industries - This counter has been advocated by us as capable of leading the rally from the front. The company has hiked product prices in the textile segment, it's infocom division has done well and declared excellent results. Since the counter has a high weightage on the indices, the counter is capable of swinging the markets significantly. The scrip is at it's April 2001 levels and is poised to test the 400 peak. We recommend a buy for the aggressive traders.

SBI - This PSU banking major is in an uptrend and and gets good support at its 13 & 30 day moving averages. The same are currently poised at the 427 and 419 levels. The chances of the scrip falling below the 400 mark before the coming Thursday are remote, which makes this counter a good fixed income play. We advocate selling puts in the August series.

BSE Sensex - Last week, we advocated that the Sensex was expected to see a resistance at the 4127 levels. The sensex has closed at 4125, barely 2 points away from our target !!!. On the downside, 3940 remains a good support in the immediate future. The Sensex has failed to close above the 2001 March levels where the Ketan Parekh stock scam was unearthed. The index has even shown a bar reversal as the closing is lower than the opening - a sign of caution. Though our overall outlook remains positive, we advocate abundant caution as the volatility may be high.

Your call of action - Since the Sensex futures are not very liquid, we suggest trading the Nifty 50 instead.

Nifty 50 - Last week, we had advocated that the Nifty was expected to encounter resistance at the 1317 levels in our post & pre market newsletters. That forecast was on the ball as the Nifty reacted downwards from the 1319 levels. These are levels where the previous stock scam of 2001 was unearthed and has a psychological impact on the markets. Should the 1325 levels be overcome, we expect the 1390 to be the next top. On the downside, we expect the 1240 levels to be the immediate support.

Your call of action - Derivative traders having initiated long positions earlier may hold the same with a stop loss at the 1295 levels. Take fresh long positions only for short term trading purposes above a significant closing over 1325 levels, maintain a stop loss at the 1305 levels and a profit motive of 20 - 25 points.

Dow Jones Industrial Average - This old economy benchmark index measures the outlook on the New York stock exchange. Last week we advocated that should the Dow close above the 9380 mark, expect the index to test the 9500 levels. That forecast has been proved accurate as the Dow has indeed made an intraweek top at the 9500 levels. The downward sloping trendline is being tested for resistance and should the Dow manage to close above the 9360 for a few consecutive sessions, we expect a minor breakout upwards.

Dow Jones - Weekly chart

Your call of action - Since Indian investors are not allowed to trade in overseas markets, this is a pure academic study.

Nasdaq - This new economy benchmark index measures the outlook on the Nasdaq exchange. Last week, we had advocated that the Nasdaq should not close below the 1684 levels or it would turn bearish. The worst seems to be over for this index as it has cleared a short term congestion and attempted to make a new high. The feel-good-factor is likely to percolate to the domestic software counters which were showing signs of revival last week. It is crucial that the Nasdaq trade higher than the 1782 levels consistently to signal a fresh run upwards. The next resistance will come at the 1865 and 1893 levels. On the lower side, expect support at the 1685 levels.

Nasdaq - Weekly chart

Your call of action - Since Indian investors are not allowed to trade in overseas markets, this is a pure academic study.

FTSE - This index measures the outlook on the London stock exchange. The index has been making higher bottoms and tops on the weekly charts. Last week, we observed that the oscillators were signalling a possibility of higher levels in the coming weeks. That forecast has been accurate as the FTSE has broken out of the downward sloping trendline and has closed a gap left on the downside. Expect the resistance to come at the 4450 levels. On the downside, the support to watch would be 4110 levels.

FTSE - Weekly chart

Your call of action - Since Indian investors are not allowed to trade in overseas markets, this is a pure academic study.

Trading tips for the week

The put / call ratio is sobering down, which shows a marginal liquidation of long positions. The previous week saw liquidation of open interest in leading stock futures. The impeding expiry of Aug derivatives series looming large, we advocate trading on lower volumes.
In the coming week, aim for safety first & capital appreciation later.
The index heavy-weights are now beginning to show strength and as long as Reliance, Hind Lever, Infosys, Telco, Tisco and ITC remain firm, expect the broader indices to be firm also. The reduction in the derivatives contract size is likely to ensure that the downsides will be limited.
We suggest a higher exposure to the steady returns route rather than speculative exposure due to higher risk component.
Adhere to stop losses religously. Await a breakout with a sharp rise in volumes to indicate the next leg of the rally.
Standby for fresh recommendations via SMS on a real - time basis.

The author is a Mumbai based investment consultant and invites feedback at Vijay@BSPLindia.com and (022) 23438482 / 23400345.

SEBI disclosure :- The author has no positions in the stocks mentioned above.