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. Ashok Leyland :- This commercial vehicles major is on upswing and is likely to see improved times in the wake of the improved outlook for the bourses. The stock has seen historic support at it's 13 day SMA and is traded at slightly higher levels. We recommend this stock as a buy for delivery based investors for the short / medium term.
Your call of action :- We recommend buying the scrip on all declines and maintain a stop loss at the 108 levels. It maybe noted that the scrip is likely to accelerate it's upward momentum if it closes above 118 on a sustainable basis. Since derivatives are not available on this counter, this is for delivery investors only. Bharat Forge :- This auto ancillary forgings major is in a major upmove as the automobile industry is undergoing improved business prospects. Last week we recommended a buy at 300 levels which failed to materialise. The coming week is likely to see the effet of a possible 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 310 - 312 or below and maintaining a stop loss at the 280 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. BPCL :- This PSU refining major is in an intermediate uptrend and witnesses support at it's 13 day SMA and currently the same is poised at 246 levels. The stock is in a low resistance zone and should close above the 270 levels for the counter to continue it's upward move. The oscillators are supporting the upmove and corrective dips are entry levels for the delivery investors.
Your call of action :- We recommend buying the scrip on all declines of upto 255 levels and maintain a stop loss at the 248 levels for delivery investors. Futures traders are advised to buy the June futures at the 258 levels and maintain a stop loss at the 253 levels. expect a profit target of 265 levels and an exhaustion point of 268 levels. Options traders are advised to buy call options at a strike price of 270 in the June 2003 series at a premium of Rs 5 - 6 which is possible on slight declines. Market lot = 1100 shares. G. E. Shipping :- this counter was recommended by us in the Flavours of the week edition dated May 17, 2003 at 42 levels on grounds of improved prospects and dividend play on the counter. The target was specified as 48 - 49 in a few months. That target has been surpassed in a fortnight and there is still scope for appreciation. We recommend a hold for investors who have bought into the counter and a fresh buy on declines in small lots.
Your call of action :- We recommend buying the scrip on all declines upto 45 and maintain a stop loss at the 43 levels. This counter is a good investment for investors who are particular about returns on capital employed. Expect levels of 52 - 54 in a conducive market. Gujarat Ambuja Cements :- this cement major is in an uptrend and attempting a saucer formation. We have been recommending this counter on a periodic basis and the trades have been fairly profitable. The scrip has been bullish above the 174 levels and is consolidating currently at present levels. In our opinion, the stock should rally if it closes consistently above the 181 levels. The stock is a market outperformer and will rally more than the benchmark indices. The oscillators are pointing towards an upmove and the current optimism in the cement sector should also be a positive for the counter.
Your call of action :- We recommend buying the scrip on declines of 173 - 175 levels and a stop loss be maintained at the 169 levels for delivery investors. A profit target of Rs 185 is likely in the short / medium term. Futures traders should buy the June series at a price above the 182 levels with a stop-loss at the 176 levels and a profit target of 190 in the short / medium term. Options traders should buy call options at a strike price of Rs 180 and a premium of Rs 5. Market lot = 1100 shares. HPCL :- this PSU refinery major is in a downward sloping channel and is attempting to break-out above it's channel top. The oscillators are also attempting an upmove and raising the probability of a further rise. The stock is a speculative buy and should be bought in small quantities.
Your call of action :- We recommend buying the scrip on declines of 296 - 300 and holding with a stop loss of 294. Expect levels of 309 in the short term. These levels are valid for both delivery and futures traders. Options traders can contemplate buying June calls of 300 strike at a premium not exceeding Rs 14 - 15. Market lot = 1300. 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 375 levels. Last fortnight, we recommended a buy above a close of 380, expecting the counter to to test the 400 highs. Subsequently, a buy was recommended above 407. These recommendations turned out profitable. Buying recommended on declines.
Your call of action :- The counter is a pure delivery play as derivatives are not available on the counter. Buy at 430 - 435 and hold with a stop loss at 415. Expect levels of 465 in the near term. Mastershare :- Last week we recommended this mutual fund unit at it 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 was recommended at 10.75 - 10.80 with a downward scope for averaging. That position is in the money as the scrip has risen.
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 116 levels. Short selling is recommended on advances as the markets are likely to rally slightly.
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 124 with a stop-loss at the 129 levels. Expect a price level of 114 - 115 levels. Options traders can buy put options in the June series at a strike price of 120 and a premium of Rs 5. Market lot = 1500 shares. Nalco :- Last week we had advocated that 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. That view was amply justified as the scrip tested the 100 mark. This counter is a market out-performer and will rally more than the benchmark indices. The oscillators are suggesting a upmove. Hold previous long positions and add on declines.
Your call of action :- We expect a small decline on profit taking so delivery investors are advocated to avoid this counter for now. Buy on declines of 96 with a stop loss at 94 and target of 105. Futures traders are advised to buy the June futures at a price above 98 levels and maintain a stop-loss at the 95 levels keeping a price target of 105 - 106 in the near term. Options traders are advised to buy calls in the June series at a strike price of 95 and a premium of Rs 7. Market lot = 2300. Ranbaxy :- This pharmaceutical powerhouse is in an upmove and has clearly out-performed the broader markets, it's peers ( Dr. reddy & Cipla ) which are languishing. Adequate support exists at the 640 levels and should the scrip close above the 700 mark, expect a new trading zone with low resistance. Buying is recommended for the patient and discerning investor.
Your call of action :- We recommend buying the scrip on all declines upto 650 and maintain a stop-loss at the 636. Expect a sharper rally once the scrip crosses over 700 on a closing basis. Keeping downward room for averaging, buy for delivery and futures, with a 4 - 6 week outlook. Futures traders are advocated to buy the July futures. Options are not advisable on the counter as returns maybe limited. Market lot = 800 shares. Reliance Inds :- Last week, we had predicted that this counter was consolidating at the 270 levels and was weak in the short term 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 moved higher on the back of an old economy rally, this counter is likely to be a front runner. That prediction has been vindicated as the stock as tested the 300 figure mark !! The stock faces tremendous short term resistance at the 306 levels which is a 6 month top. The oscillators are over extended and a small downward correction is likely before the upmove continues. For a confirmed upmove, await a closing above the 307 for 3 consecutive days.
Your call of action :- Delivery buying is recommended on this counter as long as it stays above the 307 levels. The first objective is the 314 levels and thereafter the 320 levels. Futures traders may buy the June futures above the 309 levels and maintain a stop loss at the 299 levels and a profit target of 314 levels. Options traders may buy the June calls at a strike price of 300 and a premium of Rs 6. Market lot = 600 shares. Shipping Corp :- This shipping PSU major has been on a see-saw ride ever since it was put on the disinvestment block. After having crashed to the 50 levels from a high of 112, this stock is now on the upmove and has cleared the resistance of the previous high of 78 in Oct 2002. The oscillators are pointing towards a rally and a buy is recommended.
Your call of action :- We recommend buying the scrip for delivery as long as it maintains a level above 78. Maintain a strict stop loss at the 74 levels and a profit target of 82 - 84 in the near term. Futures traders may buy the June futures above 80, maintain a stop loss at the 76 levels and a profit target of 85 - 86 in the near term. Options traders can contemplate buying the June 80 calls at a premium of Rs 3.50 - 4. Market lot = 3200 Telco :- Last week, we had accurately forecasted a bull run in this heavy-weight. 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. Currently trading at a 3 year high, we had predicted that investment preferences shifting from the new economy to old economy sectors, this counter is likely to attract institutional buying. That view was justified as the stock zoomed to cross the 175 mark. This stock is a hold / buy on declines for patient investors.
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 hold their long positions and even add in small lots on declines of 165 levels, keeping a stop-loss of 160 and a profit target of 184 in the near term. Futures traders are advised to buy the June futures at the 168 mark and keep a stop loss at the 164 mark and expect a price target of 182. This recommendation is for the medium term. Options traders are advised to buy the June 175 calls at a premium of Rs 5. VSNL :- This stock recommended in this newsletter last week has generated tremendous trading opportunities. 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. This counter is now also a dividend play. We recommend a buy as a speculative call.
Your call of action :- Buy June futures at the 87 - 88 levels and maintain a stop-loss at the 84 levels. We expect a profit target of 93 - 95 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. Market lot = 700 shares. Indices - Domestic BSE Sensex :- Last we advocated that the Sensex was expected to see a further rally in the offing. That has been justified as the markets have shifted in bullish hands. The next resistance should come at the 3045 levels or so.
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 our subscribers stay long in the Nifty. We re-affirm that view and advise holding of that long position to let traders' profits run. The Nifty is likely to encounter resistance at the 1014 levels which is the channel top. Should it clear that resistance, expect 1035 levels as a high probability.
Your call of action :- We advocate taking a fresh 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 was supported by the oscillators. The 9050 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. Last week, we predicted that 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. That criteria is now fulfilled and the Nasdaq is at near 1600 levels. We expect a further rally upto the 1660 - 1680 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. Last week, we forecasted that the oscillators were 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. That resistance of 4080 has not been surpassed on a closing basis, though probabilities are fair.
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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