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 is now in an intermediate uptrend and is seeing profit taking after a good run upwards for over 10 weeks. The historical support is the 13 day SMA and the same maybe violated if the markets undergo a deeper correction. The momentum oscillators are pointing towards a further fall and the 30 day SMA maybe the next buying trigger. A buy is advocated on declines.

Your call of action - We recommend buying the scrip for delivery based investors at the 166 levels with a stop loss at the 163 levels and a profit target of 171 - 172 levels. Futures traders may buy the Aug series ( priced at Rs 3 premium to cash ) at a decline of 168 - 169 and maintain a stop loss at the 166 levels. Expect a profit target of Rs 173 - 174. Options traders are advised to buy the Aug 165 calls at a premium of Rs 16. Alternately, sell the July 165 puts and avail of a premium of Rs 2. Trades advised in small lots only. Market lot = 1500 shares.

Alsthom Power - This power company has been advocated repeatedly over the last 4 months. The price is likely to consolidate between the 115 - 135 levels. The stock is a market out-performer and is likely to give superior returns if bought on declines. The power sector is undergoing a bullish phase currently and the upbeat sentiments should see the scrip limited downsides. A good by on declines in small lots.

Your call of action - We recommend buying the scrip for delivery based investors at the 110 - 115 levels, maintain a stop loss at the 103 levels and expect the next leg of the upmove to take the stock to 125 levels in the short term. Over a medium / long term, expect a bigger appreciation. Since derivatives are not available on the counter, this is a pure delivery play.

Bharat Electronics - This PSU electronics major has been in a major uptrend since the last 3 months and is witnessing a corrective fall currently. Should the counter not fall below the 330 levels, expect the upmove to remain intact. The oscillators are signaling a correction which maybe exerting a sideways / lower pressure on the price graph. Buy only if the stock turns higher from this support, which will be a confirmation of the uptrend. Avoid bottom fishing if the 13 day SMA is violated.

Your call of action - We recommend buying the scrip for delivery based investors if the stock trades higher above the 30 day SMA. Maintain a stop-loss at the 330 levels and a profit target of Rs 365 in the near term. Futures traders may buy the August series ( illiquid presently and at Rs 15 premium to cash ) at a price of 350 - 352 and maintain a stop-loss at the 348 levels. Expect a price target of 362 - 365 in the near term in a good market. Options traders are advised to refrain from trading as the trading is fairly illiquid on the counter. We advocate trades on very small exposure on this counter as the volatility is high and liquidity is low. Market lot = 1100 shares.

Bharat Forge - this auto ancillary has had a tremendous run upwards as the automobile sector witnesses a bouyant phase. Riding on rising sales and investment buying support, this stock is a leading market out-performer on the market watchers' radar screens. We have been repeatedly recommending this counter on past occasions which have been highly profitable. Last week, we had recommended this counter at the 355 - 360 levels which has been triggered on the 17 th of july 2003 !! Results declared were upbeat and the buying momentum is likely to continue.

Your call of action - We recommend buying the scrip for delivery based investors ( derivatives are not available on the counter ) at the 365 - 368 levels with a room for downward averaging upto 355 levels, in case the volatility takes the counter down. Previous weeks buyers may hold their long positions which are deeply in the money and near the profit target levels. Maintain a stop-loss at the 340 levels and a profit target of 390 - 395 in a short time.

Corporation Bank - This banking counter is a stable market out-performer and is less volatile as compared to it's small priced peers. The bank is a low NPA entity and it's growth rates are in the higher bracket in it's industry. We recommend a buy for patient investors with at least a quarter in holding perspective.

Your call of action - We recommend buying the scrip for delivery based investors at lower levels of 175 - 180 in case the markets react lower. The oscillators are pointing towards a firm price line. Maintain a stop-loss at the 168 levels and a profit target of 195 - 200 in a conducive market in the short / medium term. Since derivatives are not available on this counter, this is a pure delivery play.

E-Serve - this software company is a very strong market out-performer and has seen a huge run upwards since Sept ' 02. This company was catering mainly to Citibank which still remains a major source of revenues. The weekly chart below shows a fresh bullishness on this counter which is likely to take the scrip to 700 + levels in the near term. Lower traded volumes and higher volatility will mean low exposure is advocated on this counter.

Your call of action - We recommend buying the scrip for delivery based investors ( derivatives are not available on this counter ) at the 550 levels and a stop loss be maintained at the 510 levels. Expect 660 - 675 in a conducive market in a few months. Invest small lots only.

Gujarat Ambuja Cements - this cement major is a strong market out-performer as it's relative strength is invariably higher than the indices. That makes this scrip a safer bet for traders / investors in volatile markets. The counter has had a good run and is likely to continue holding on to gains. Historically, the scrip gets support at the 30 day SMA which is currently poised at the 197 levels. It maybe noted that buying is being recommended on the basis of an assumption that the scrip will see a minor bounceback from this support and therefore this is a speculative decision.

Your call of action - We recommend buying the scrip for delivery based buyers at the 200 - 202 levels with a tight stop loss at the 198 levels. Your profit target is the 212 level in a conducive market. Futures traders may buy the Aug futures ( trading at Rs 3 premium to cash ) at a price of 204 with a 4 rs stop loss and a price target of rs 200. Expect a target of 212 - 214. Options traders may contemplate buying the Aug 205 calls at a premium of Rs 12. Alternately sell the July 200 puts at a premium of Rs 4 - 5. Market lot = 1100

Glaxo SmithKline Pharmaceuticals - this counter has been recommended by us twice in as many months and has proven to be a money spinner for investors. The daily price chart shows an interesting retracement pattern on the counter. The low of 275 made in feb ' 03 and the high of 397 in June ' 03 are the ranges in which the retracement pattern is computed. The same shows excellent support at the 350 levels which is the 38% correction on the daily charts. Buying on all declines is advocated on this counter as this MNC is likely to be the biggest gainer of the EMR / IPR regime which will see major changes as per the WTO norms in 2005.

Your call of action - We recommend buying the scrip for delivery based investors on declines of upto 360 - 365 and keep room for averaging upto 350. Maintain a stop-loss at the 335 levels, and expect a price target of Rs 425 in a few weeks. Since derivatives are not available on this counter, this is a pure delivery play.

Hind Lever - This counter has been put on the sell list of institutional players as the sales are likely to be a dampener yet again. This company has been dogged by lower topline growth rates since 6 - 8 quarters and even the improved monsoons are unlikely to help the company in a significant manner. We advocate a sell / short sell on significant advances.

Your call of action - We recommend selling the scrip for delivery based investors on advances of 155 - 160 and convert their portfolio holdings to cash. Futures traders may short the July futures at 156 - 158 levels, maintain a stop loss at the 162 levels and profit target of 146 - 148 in a conducive market. Options traders are advised to sell the July calls at a strike price of 170 and a premium of Rs 4 - 4.50. This options strategy is a very low risk one and is excellent for traders looking for absolute returns on investments. Market lot = 1000 shares.

Indian Overseas Bank - this small priced banking stock is in a bullish groove and after seeing a small correction, is showing signs of upward movement yet again. Buying is recommended as there are expectations of a higher FII limit in the sector. Buy on declines.

Your call of action - We recommend buying the scrip for delivery based investors at levels of 24 with a stop loss at the 21 and a profit target of 30 in a conducive market. Since derivatives are not available on this counter, this is a pure delivery play.

IPCL - this petrochem major is witnessing a downtrend after an excellent run up since the Ambanis gained management control over the counter. The corrective phase is likely to see the counter taking support at the 30 day SMA which is poised at the 111 levels. Small buying by patient investors can commence in small lots at these levels with a quarterly outlook.

Your call of action - We recommend buying the scrip for delivery based investors at the 110 - 111 levels with a stop loss at the 105 levels and a profit motive of 116 - 118 in a conducive market. Derivatives traders are advised to play the options by adopting a dual strategy of selling calls and puts at appropriate prices. Sell July 130 calls at a premium of Rs 2 and sell the July 110 puts at a premium of Rs 2. Market lot = 2200 shares. Options sellers will get a premium of Rs 8800

Jindal Steel & Power - this steel sector player has been rallying ahead of it's peers in the same sector and is a strong market out-performer in the short term. The counter takes historical support at it's 13 day SMA and should present traders opportunities for buying at those levels and exiting in the short term at a good profit. A trading / speculative buy is recommended on declines upto 490.

Your call of action - We recommend buying the scrip for delivery based short term traders at the 490 levels and a stop loss at the 478 levels. Expect a price of 545 - 550 in a firm market. Since derivatives are not available on this counter, this is a pure delivery play.

LIC Housing Finance - This housing finance major is rapidly gaining market share and the same is being reflected on the share price. The scrip has seen heavy institutional buying and also participation by retail investors. The 13 day SMA is a very strong support for the markets and the oscillators are pointing towards a continued bullishness. A good buy on declines for the patient delivery investor.

Your call of action - We recommend buying the scrip for delivery based investors at the 135 - 138 levels in case the markets correct lower. Keep a stop loss at the 125 levels and expect a price of 160 in a conducive market in a few weeks. Since derivatives are not available on this counter, this is a pure delivery play.

Larsen & Toubro - this counter has been making new recent highs in the last 2 months after the Grasim takeover imbroglio started. After hitting a high of 280, the counter has been consolidating lately. The historical support comes at the 13 day SMA which is currently at the 265 levels. Should the counter hit these levels in a falling market, one can attempt an intraday / short term trade purely from a speculative point of view. It should be noted that speculative trades must be entered into with lower volumes.

Your call of action - We recommend buying the scrip for delivery based buyers at the 265 - 268 levels with a short term perspective. Maintain a stop loss at the 258 levels and a profit target of 278 in the near term. Options traders may sell the 250 July puts at Rs 1 premium. Market lot = 1000 shares

Mah & Mah - this stock is another beneficiary of improved monsoons forecast as well as the outlook for the automobile sector. Last week there was a strong upmove on rumours of a stake sale in Mahindra British Telecom ( MBT ) to Wipro, which would unlock cash to the Mah & Mah shareholders. The counter has turned bullish and a strong market out-performer in the last few months. Last week we had advocated that there was a fair bit of buying intrest on the counter from operator / retail segments and we feel that the counter needs to consolidate at the 160 - 165 levels before the next leg of the rally can commence. That has come true as the counter has touched 190 intraday. There is also positive news of the company exporting CKD kits in the overseas markets, which will be the next trigger. The recommendation last fortnight of a buy above the 145 levels has been highly profitable. We recommend an investment / trading buy on declines. The 13 day SMA remains a strong short term support on the counter.

Your call of action - We recommend buying the scrip in the cash segment at the 165 - 168 levels in a correcting market and hold with a stop loss at the 160 levels. Expect a price target of Rs 178 in a conducive market in the near term. Should the markets be firm, expect higher levels. Futures traders may buy the July futures at 172 levels, with a stop loss at the 168 levels. Expect a price target of Rs 180 levels. Options traders may contemplate selling the July puts at a strike price of Rs 160 and a premium of Rs 1.25. Market lot = 2500

Mastershares - this counter was recommended by us at the 10.25 levels and profit taking was recommended at the 11. 25 levels in May 2003. That recommendation proved highly profitable as approximately 10 % profits were booked in under a months time. Last week, this counter was recommended again and has seen superlative appreciation. As the markets rally, the NAV of this scrip will also surge, leading to a price appreciation. What makes this scrip attractive is the low price and a limited downside. A buy on declines.

Your call of action - We recommend buying the scrip for delivery based investors at lower levels of 11.85 and keep room for averaging upto 11.20. Maintain a stop loss at the 10.85 and a profit target of 13.50 - 14 in a good market. Since derivatives are not available on this counter, this is a pure delivery play. Now fresh investments will be for patient investors as a significant upmove has already occured.

Ranbaxy - Last month, we had accurately predicted that the current rally in the pharma sector was likely to see this counter benefit significantly as this Indian MNC is likely to maintain it's market out-performer rating. Buying was recommended at 760 levels for a medium term perspective. However, the rally surpassed even our own expectations. The current sideways movement is a consolidatory phase and is showing signs of gradual accumulation at lower levels. We recommend a hold / buy on declines for a patient investor. The 4 figure mark is quite likely by the year end in a conducive market.

Your call of action - We recommend buying the scrip in the delivery segment at the 810 - 815 levels and hold with a stop-loss at the 780 levels. Keep a price target of 900 in a conducive market in the near term. Futures traders may buy with a medium term perspective as this recommendation is for a few weeks' period in tenure. The entry price should be close to the 807 mark, with a stop-loss at the 785 levels and a price target of 850 in a short time. Options traders may sell the July call options at a strike price of 800 and a premium of Rs 10. It maybe noted that delivery investors will benefit this counter the most. Market lot = 800 shares. Selling these puts will fetch a low risk premium of Rs 8000 in 10 days.

State Bank - this counter has become a leading investment / trading scrip for traders and institutional players alike. This counter has hit a 5 year high whereas the indices are at 26 month highs. There are reports of FII limits in the banking sector being hiked, which is boosting the sentiments for banks. Being a leading bank with the highest market penetration, this counter is the most obvious choice for strong players. A good buy on declines.

Your call of action - We recommend buying the scrip for delivery based investors at the 400 levels with a stop loss at the 380 levels and a profit target of 450 in a few weeks time. Futures traders are advised to buy the Aug futures at Rs 410 ( Aug futures trade at rs 6 premium to cash ) with a stop loss at Rs 404 and a target of 424 in a conducive market. A safer approach would be to sell the July puts at a strike of 390 and a premium of Rs 2.50. Market lot = 1000 shares. This options strategy will yield a low risk premium inflow of Rs 2500 in 10 days.

Siemens - last week, we had advocated buying this counter via our SMS alert and the trade was initiated. The company is on a turnaround trail as massive re-structuring was initiated 4 years ago. The results are now coming in as the fundamentals are reflecting the efforts. The retracement pattern shows a support at the 338 levels which is a 50 % retracement from the high point of the rally. A good buy for the delivery investor with a medium / long term perspective.

Your call of action - We recommend buying the scrip for delivery based investors around 340 levels with a stop loss at the 335 levels. Expect a price of 370 in the short / medium term. Should the markets be conducive, expect much higher valuations in a few months. Since derivatives are not available on this counter, it is a pure delivery play.

Telco - this counter has been one of the most repeated recommendations in the recent past and also one of most profitable. The company is rising the wave of bouyancy in the auto sector with it's cars being the leaders in the B segment. Export prospects, good sales in the CV segment and a brighter outlook ahead are positive factors that will keep investor / trader intrest alive on this counter. A good buy on declines.

Your call of action - We recommend buying the scrip for delivery based investors on the 13 day SMA support which is at the 214 levels, should the markets fall to those levels. Longer term investors may even buy at higher levels of 219. Keep a stop-loss at the 212 in the short term and longer term players should maintain a stop loss at the 208. We expect a price of 230 in the short term. In a conducive market, we foresee a price of 240 or higher in a few weeks. Derivatives traders should stick to the options route by selling July puts at a strike price of 205 at a premium of Rs 2. This strategy will yield a low risk profit of Rs 6600. Market lot = 3300 shares.

Tisco - This Tata group steel major has been in a bullish groove since April ' 03. Good export prospects, firm prices, higher sales and continued optimism in the sectoral outlook are likely to keep this counter in focus of investors / traders alike. A good buy on declines.

Your call of action - We recommend buying the scrip for delivery based investors at the 186 levels and maintain a stop loss at the 181 levels and a target of Rs 195 in the near term. Derivatives traders may sell the July puts at a strike price of 180 and a premium of Rs 1.50. This strategy is likely to yield a low risk returns of Rs 2700. Market lot = 1800 shares.

BSE Sensex - Last week we advocated that the Sensex was expected to see a slight appreciation before a fall. The 3760 levels were advocated as a possibility from where a small retracement could be seen. There was negative divergence on the oscillators which showed the possibility of a fall before the markets take the next upward leg. These reasons were proved correct as the markets crashed from these very levels !! The oscillators are now pointing towards a further fall before stability can return to the markets. We feel the next meaningful support will come at the 3560 levels.

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 likely to encounter resistance at the 1187 - 1190 levels. On the lower side, we expected support to come at the 1130 levels. We were proved accurate on both counts as the markets retraced from 1176 and saw an intra-week low of exactly 1130 !!! We had also written that the Nifty would not close below the 1115 levels. The next meaningful support will come at the 1110 - 1115 levels in the immediate term. Traders need to watch this level for the coming week on the downside. On the upsides, expect the upmove to be capped at the 1165 - 1170 levels. selective shorts can be initiated via the options route at those levels. The oscillators are continuing to point towards a bearishness in the short term outlook.

Your call of action - We advocate initiating short positions on the Nifty by selling calls at the 1170 strike and a premium of Rs 6 - 7. This strategy will yield a premium inflow of Rs 1200 - 1400 per contract in 10 days. Market lot = 200 units.

Dow Jones Industrial Average - This old economy benchmark index measures the outlook on the New York stock exchange. The index had been making higher tops and bottoms and the move was supported by the oscillators. After the Federal reserve meeting, the markets are cooling off, as can be seen from the daily bar chart below. The previous fortnight has seen the Dow Jones moving in a short term downward sloping channel which could be a flag formation. The same will be confirmed only upon the breakout form the channel top at the 9220 levels. Should the Dow Jones close above this level and remain above this, expect the fresh upmove to see acceleration in the coming week - possibly beyond the 9400 mark. On the lower side, the absolute support is at the 8875 levels.

Dow Jones - Daily 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. The index is making a saucer formation which is supported by the oscillators. The 30 day SMA is a good historical support and is currently poised at the 1670 levels. Expect the Nasdaq to see buying at these levels. Should it close below these levels, expect weakness to set in on the index, thereby effecting the domestic technology stocks too. On the upside, the index can gain only if it clears the previous high of 1776 levels. That will be a resistance to to watch in the coming week

Nasdaq - Daily 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 index has been unable to surpass the downward sloping channel. That resistance point is 4280 which the FTSE must surpass. In the coming week, our investors must watch these levels. On the downside, the support to watch would be 3890 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 stocks recommended herein are exclusive of the software sector which is a deliberate omission due to higher volatility expected.
Since the markets are likely to be volatile with a weak bias, we have advocated a greater emphasis on options strategies - particularly selling options. We feel that this strategy will yield comparative low risk superior returns, since the expiry is just 10 days away.
In the coming week, aim for safety first & capital appreciation later.
The index heavy-weights are now beginning to show fatigue and as long as Reliance, Hind Lever and ITC remain suppressed, expect the broader indices to be range-bound.
We have recommended stocks that are to be bought for intraday / short term on downward supports, these counters will be highly speculative and therefore extra caution is advised on these trades.
Keep your traded volumes small and adhere to stop losses religously.
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.