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. Bharat Forge :- This auto ancillary forgings major is in a major upmove as the automobile industry is undergoing improved business prospects. The coming week is likely to see reduction in petrol / diesel prices and therefore a rise in automobile stocks. That will have a trickle down effect on ancillary / supplying companies and Bharat Forge is a prime contender in the ancillary units. We recommend a buy on all declines for patient delivery investors.
Your call of action :- We recommend buying the scrip on all declines of 300 or below and maintaining a stop loss at the 270 levels. Some room for downward averaging should be kept on declines. We expect a price of 350 and above in a good market in a quarters time. Since derivatives are not available on this counter, this is a pure delivery play. 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 :- Above a closing of 345, this counter is likely to see an accelerated rally. Buy on declines of 350 - 355 if not purchased already. Investors having bought last week should await 385 levels to start partial profits and reduce the holding on cost on remaining holdings. 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. Hindustan Lever :- This index heavy-weight FMCG major is undergoing a temporary rally on a variety of factors. As technology sector stocks fall out of favour, this is a safer haven for FII's, besides, there is a special dividend yield factor. The overall market sentiments are also improving, which makes this counter a buy candidate for short term players. However, our buy recommendation is a short term outlook only.
Your call of action :- Delivery players may buy the counter at current levels of 150 with a stop loss at 145 and a target of 155 - 157 levels in the near term. Futures players can buy the June futures at a price of 143 ( the June futures are quoted at a Rs 6 discount ) with a stop loss at the 140 levels and a profit target of 150. As the May futures near expiry, the discount on June series will diminish rapidly. Options traders may buy the May 160 call options at a premium of Rs. 0.20 - 0.25 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 370 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 - especially if the scrip closes above the 407 levels. Buying recommended.
Your call of action :- The counter is a pure delivery play as derivatives are not available on the counter. Buy at 380 - 385 and hold with a stop loss at 365. Above 407 levels, the upmove will accelerate. Short term traders can buy above 407 with a stop loss at 398. Expect levels of 418 in the near term. Mastershare :- This mutual fund unit is hitting a 2 year high as the UTI restructures it's equities portfolio. This investment is for the discerning investor who is conscious of returns on investment. This scrip though a slow gainer, the percentage returns are significant. The oscillators are pointing towards a continued rally and a further appreciation is likely. Buying is recommended.
Your call of action :- delivery investors are advised to buy the scrip at present levels, with a scope for averaging upto 10.50 levels and maintain a stop-loss at 10.20 levels. We expect a level of 11.20 - 11.25 in a few weeks. Since derivatives are not available on the counter, this is a pure delivery play. N.I.I.T. :- this software education and applications solutions provider is in a downward groove and trading below it's 13 day SMA after a brief rally. The weakness in technology stocks is likely to drag this counter to it's recent lows of 111 levels. The MACD oscillator is pointing towards a weakness which will be confirmed below a closing of 117 levels. Short selling is recommended.
Your call of action :- Since the recommendation is for short selling, the same is possible only in the derivatives segment. We recommend selling the June futures at a price of 122 - 123 with a stop-loss at the 126 levels. Expect a price level of 114 - 115 levels. Options traders can buy put options in the June series at a strike price of 115 and a premium of Rs 3. Nalco :- This aluminum major is moving in tandem with the private sector leader - Hindalco. With the international markets firming up, the prospects for these two companies is improved. The counter has started moving above the 200 day SMA and a closing above the 93 levels will see a faster upmove.
Your call of action :- We expect a small upmove so delivery investors are advocated to avoid this counter for now. Futures traders are advised to buy the June futures at a price above 92 levels and maintain a stop-loss at the 90 levels keeping a price target of 95 - 96 in the near term. Options are advisable on this counter as the price fluctuation expected is very limited. Reliance Inds :- this counter is consolidating at the present levels and is weak in the short due to the dividend stripping factor. However, lower crude prices in the international markets is likely to benefit the petrochemical sector as crude is an input cost. If the markets move higher on the back of an old economy rally, this counter is likely to be a front runner.
Your call of action :- Delivery buying is recommended on this counter as long as it stays above the 272 levels. The first objective is the 276 - 277 levels and thereafter the 280 levels. Futures traders may buy the June futures above the 272 levels ( trading at a Rs 2 premium to cash ) and maintain a stop loss at the 269 levels and a profit target of 276 - 277 levels. Options traders may buy the June calls at a strike price of 270 and a premium of Rs 8. SKF Bearings :- This MNC bearings manufacturer is in a major turnaround mode as the chart pattern shows a classic saucer formation. With the fortunes of the automobile industry, this ancillary supplier is also expected to out-perform the markets. A god buy for patient delivery based investors with a 6 month time frame.
Your call of action :- delivery traders can buy this counter at slight declines upto Rs 50 and maintain a stop loss at 45 levels. Expect the price to cross Rs 60 - 65 in the near term. Since no derivatives are on offer, this is a pure delivery play. Telco :- This commercial vehicles and passenger car major is in a major uptrend since a year and is traversing in a low resistance zone after it crossed the 169 mark. As investment preferences shift from the new economy to old economy sectors, this counter is likely to attract institutional buying. The coming week will see a possible announcement of petrol & diesel price cuts which will boost auto sales. We recommend a speculative buy.
Your call of action :- This counter is trading at near it's 30 month high and that imbibes confidence in the counter. Delivery buyers can buy on declines of 165 levels, keeping a stop-loss of 160 and a profit target of 178 in the near term. Futures traders are advised to buy the June futures above the 174 mark and keep a stop loss at the 171 mark and expect a price target of 177 - 178. Options traders are advised to buy the June 175 calls at a premium of Rs 6. Tata Steel :- Last fortnight, 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 had been making higher bottoms and tops and is likely to see resistance at the 150 levels. Savvy traders were advised to buy futures in the first half of the previous week and sell at higher levels in the latter half. The long entry was advocated at 140 and exit at 145, which has been profitable. Fresh buying is advocated in small lots only.
Your call of action :- Delivery traders may buy in small lots at the 142 levels and maintain a stop loss at the 140 levels. Expect resistance at the 148 - 150 levels. Futures traders are advised to buy futures at the 142 levels, maintain a stop loss at 140 and exit the long position at 148 levels. Options traders may not get optimal results from these narrow price moves and are advised to abstain from the counter. VSNL :- this telecom major is likely to see some upswing after the Tata's announced that they had no intention of disinvesting their management control in the ex-psu. An aggressive VRS has been announced and MTNL & BSNL have decided to retain VSNL for their ILD ( international long distance ) calls as a preferred carrier till March 2004. This should boost the counters prospects. We recommend a buy as a speculative call.
Your call of action :- Buy June futures above the 84 - 85 levels ( June futures command a 1 Re premium to cash ) and maintain a stop-loss at the 82 levels. We expect a profit target of 88 - 89 in the near term. Since the contract size is very small and margin outlay is very affordable, we strongly advocate buying futures rather than options. 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. Await fresh entry till the 985 levels are not surpassed. 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 was supported by the oscillators. The 9000 mark will be an important resistance level for the index.
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 1545 levels are a crucial resistance level being the previous highs. It is important that the Nasdaq cross these levels and maintain higher closing 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 showing signs of fatigue. Expect a selling pressure to come at the 4080 levels which is the previous top. Any close above the 4080 levels will bring a sharper rally in the index.
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 no positions in the securities mentioned above.
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