Please stay online to enable loading of graphics from our web-servers. Please refer to the section investment / trading tips for the week at the base of the newsletter. Digital Globalsoft :- Last week, we had advocated that this mid cap software counter has seen historical consolidation at the 500 - 510 levels and is likely to see a small upmove in tandem with the Nasdaq rally. Also, the short term momentum oscillators did not rule out a slight further fall. We had advocated buying for strong hearted traders at the 510 levels for the short term, which paid rich dividends. We now expect consolidation at the 555 - 560 levels, above which 580 levels are possible.
Your call of action :- Delivery traders may abstain from the counter. Futures traders may buy the May 2003 futures above the 550 levels with a stop loss at the 535 levels and a profit objective of 574 in the immediate term. Options traders may buy call options in the May 2003 series at a strike price of 540 and a premium of Rs 18. F&O market lot = 400 shares. Gujarat Ambuja Cements :- This cement major has been consolidating above the 13 day SMA and has rallied past it's 200 day SMA. The rally has been accompanied by heavy volumes and a confirmatory pattern on the short term oscillators. That makes the probability of a fresh upmove as fair. Buying is recommended with a short term objective.
Your call of action :- Delivery investors may buy the counter at the present levels with a stop loss at the 170 levels and a target price of 184 in the near term. A price of 190 is also possible in a firm market after due corrections. Futures traders can buy the near month futures above the 177 levels with a stop loss at the 172 levels and a target price of 182 in the near term. Options traders may buy the 175 calls in the May 2003 series at a premium of 3.50. F&O contract size = 1100 shares. Glaxo :- Last week, we had advocated a buy on the counter as this MNC pharmaceuticals major is showing signs of revival on the long and short term charts. The biggest positive for the counter is the future prospects for it's business. As India approaches the WTO deadline for the exclusive marketing regime under the intellectual property rights agreement, patent norms are likely to undergo a sea change. MNC pharmaceutical companies are likely to dominate the market place with new launches and gain market share. This company already has the widest spectrum of products in it's peer group and has aggressively re-structured it's operations. tail ended brands have been hived off and a VRS has been completed. For patient delivery based investors, it is a good buy.
Your call of action :- Buy the counter on all declines upto 310 and maintain a stop loss at the 290 levels. Above a closing of 345, this counter is likely to see much higher levels. This recommendation is for delivery based investors with a medium term perspective as the outlook is for atleast 3 - 6 months. Since derivatives are not offered on the counter, it is a pure delivery play. Great Eastern Shipping :- this counter has been making higher bottoms and tops on the weekly charts. The company is a beneficiary of the improved outlook in the shipping sector after the end of the Gulf war. Also, the Indian shipping sector is seeing a boom in the operations. The management has bought back equity in the recent past and is a good dividend play. Buying is recommended on declines.
Your call of action :- Buying is recommended on declines upto 41 - 42 levels with a stop-loss at the 38 levels. The investment outlook is for 4 - 6 months. expect a price of 47 - 48 levels in that time frame along with a decent dividend. Since derivatives are not available on the counter, this is a pure delivery play. HPCL :- this counter is trading within the downward sloping channel and is consolidating in the upper half of the channel since a fortnight. The scrip has attempted a breakout above the channel and is supported by the oscillators which are indicating bullishness. Should the counter remain above the 302 levels, expect an upmove. Above the 315 levels, expect an accelerated upmove.
Your call of action :- Delivery players may buy the counter above the 315 levels and maintain a stop-loss at the 302 levels. Expect a price of 328 in the near term after due corrections. Futures players may buy the near month futures above the 311 levels with a stop loss at the 305 levels and a target price of 318 in the short term. Options traders may buy the May 2003 calls at a strike price of 310 and a premium of Rs 6. F&O contracts size - 1300 shares. Infosys - This counter is consolidating at the 2800 levels and the short term momentum oscillators are indicating a possibility of an upmove. We recommend a buy on speculative grounds for the absolute short term, above the congestion levels of 3070. Since the Nasdaq has been firming, we expect the domestic software stocks to rally in tandem - however slightly. Traded quantities must be restricted however.
Your call of action :- Delivery traders can buy in very small lots above the 3070 - 3080 levels with a stop loss at the 2999 levels and a profit target of 3185 in the short term. Futures traders may buy the May futures above the 3060 levels with a stop-loss at the 2996 levels and a target price of 3190 levels. Options traders are advocated to buy the May calls at a strike price of 3100 and a premium of Rs 40. F&O contracts size = 100 shares ITC Ltd :- this tobacco and hotels major has lined up a vast array of diversified products to spread itself over a variety of businesses once the going gets tough for the tobacco business. New products include apparel, canned foods, commodity trading, spices, software etc. There is also the tussle for management control by way of cornering equity control through the open market route, which is keeping the counter active in the secondary markets. The counter is a market out-performer and is showing signs of bottoming out and trading at 52 highs. We recommend a buy.
Your call of action :- Delivery investors may buy the scrip at current levels and stay invested with a stop loss at the 675 levels. Keep a target of 725 in the near term, in a conducive market even higher levels are achievable. Derivatives traders are advised to buy call options in the June 2003 series at a strike price of 720 and a premium of Rs 12. F&O market lot = 300 shares. Jindal Steel & Power :- This counter is moving in an upward sloping triangle and gets a support at the lower trend line. Currently, the support is at the 360 levels. Last fortnight, we recommended a buy above a close of 380, expecting the counter to to test the 400 highs. That recommendation turned out profitable. After a correction, the counter is all set to bounce again - if the markets are conducive. Buying recommended.
Your call of action :- The counter is a pure delivery play as derivatives are not available on the counter. Buy at 350 - 355 and hold with a stop loss at 345. Expect levels of 394 in the near term. MTNL :- this counter was recommended as a short sale a fortnight ago and has been a profitable trade inspite of hitting the stop-loss levels once. The scrip is moving in a downward sloping channel and the oscillators are signaling a further fall as a distinct possibility. With the confusion over the telecom tariffs and rollback of prices, the company is likely to encounter earnings pressure. Below a close of 93 levels, expect a further weakness.
Your call of action :- We advocate holding short positions initiated earlier, aggressive traders may go short on the futures segment in the May 2003 series, once the price falls below the 93 levels with a stop-loss at the 96 levels and a profit target of 88. However fresh shorts must be initiated with minimal volumes. Options traders may buy put options at the 95 strike and a premium of 2. F&O market lot = 1600 shares. Siemens :- this MNC electrical power major is trading at near 3 year highs and was recommended by us a fortnight ago for patient delivery traders. The company has hived off non-core businesses, successfully implemented a massive VRS and pre-paid expensive debts. The holding of the German parent has been hiked and fresh capital has been infused by way of a 1:4 rights issue in 2000. The company is turning around and the same shows on the stock price also. Above 350, the counter enters a low resistance area where upward selling pressure is eased. A good buy on all declines.
Your call of action :- Delivery investors are advocated to buy into the counter at all declines upto 325. Maintain a stop-loss at the 300 levels and expect a price of 400 + in 6 months or earlier depending on the market sentiments. Since derivatives are not available on the counter, this is a pure delivery play. Tata Steel :- Last week, we accurately forecasted that this counter has been trading well in it's downwards sloping channel and is attempting to test it's 200 day SMA on the upside. The counter has been making lower bottoms and tops and is likely to see resistance at the 140 levels. Savvy traders were advised to buy futures in the first half of the week and sell at higher levels in the latter half. The long entry at 135 and exit at 140 have been profitable. Fresh buying is advocated above the 142 levels.
Your call of action :- Delivery traders may buy in small lots above the 142 levels and maintain a stop loss at the 140 levels. Expect resistance at the 146 - 148 levels. Futures traders are advised to buy futures above the 142 levels, maintain a stop loss at 140 and exit the long position at 146 levels. Options traders may not get optimal results from these narrow price moves and are advised to abstain from the counter. Indices - Domestic BSE Sensex :- Last we advocated that the Sensex was expected to see a short corrective rally in the near term possibly upto 3040 levels. That view is vindicated as the Sensex has closed above that level. Now the next target for the near term resistance is at 3120 levels. The oscillators are pointing towards a further rally in the offing.
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 predicted that the Nifty may see a relief rally in the near term. That relief rally has come about as the index has gained ground and we advocated that our subscribers stay long in the Nifty. We re-affirm that view and advise holding of that long position to let traders' profits run.
Your call of action :- We advocate taking a bullish view on the Nifty only for short term traders. Holding earlier long positions is advisable. If the longs have been squared off, do not buy Nifty in a hurry as we expect a small correction before a fresh view can be taken. Short selling is not advised at this juncture. Indices - International Dow Jones Industrial Average :- This old economy benchmark index measures the outlook on the New York stock exchange. The index has been making higher tops and bottoms and the move is supported by the oscillators. The likelihood of the Dow Industrial average touching the 9000 mark before a correction sets in is fair.
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 1525 levels are a crucial resistance level and should the index manage to close above this level on a sustainable basis, expect minor selling at the 1568 levels. Should the markets remain firm, expect a level of 1620 levels.
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. The oscillators are bearing out the sharp rally in the price chart by a steep rise on their own reading. Expect a substantial selling pressure to come at the 4350 levels.
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 author is a Mumbai based consultant and invites feedback at Vijay@bsplindia.com or ( 022 ) 23438482 / 23400345. SEBI disclosure :- The author has positions in the MTNL futures mentioned above.
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