The Professional Ticker Reader TM

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Flavours of the week                                                            April 04, 2004

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 counter has made higher bottoms and tops formation and has also broken above the short term moving averages. The upmove has been supported by the short term oscillators and volumes traded. We see resistance coming at the 276 levels which is a formidable triple top formation. Should this hurdle be crossed, expect the stock to accelerate the upmove.

Your call of action - 

• Investors / cash segment players - buy the counter at the current levels and maintain a stop loss at the 255 levels and a profit target of 276 in the immediate future. Buying at current levels should be in small lots only. Above a conclusive closing of 277, buy more aggressively.

• Aggressive F&O traders - Buy the april futures at the current levels with a stop loss at the 261 levels and hold with a profit target of 273 / 275 in the near term. Options traders can buy the April 280 calls at a premium of Rs 4.

• Derivatives contract size - Market lot = 1500, F&O margins = approx Rs 75,000 ( subject to change daily ).

Bank of Baroda - this counter has made an interesting chart pattern - a wedge with a bullish bias and a subsequent breakout above the same. It should be noted that the price graph must stay above this trend-line and trade with higher volumes. The upmove will then be secular and sustainable. The oscillators point towards an upmove.

Your call of action - 

• Investors / cash segment players - Buy at the current levels with a stop loss at the 237 and an immediate target of 258 in the near term. Should the markets trend higher, we expect the 265 levels to be a possibility. 

• Aggressive F&O traders - Buy the April futures above the 253 levels, maintaining a stop loss at Rs 248 levels and a target of 258 / 260 in the short term. Should the markets remain bullish, expect the 264 levels to be a reality. 

• Derivatives contract size - Market lot = 1400, F&O margins = approx Rs 75,000 ( subject to change daily ).

BPCL - This oil PSU major has made a similar chart pattern like the one above in Bank of Baroda. A bullish wedge breakout with a positive confirmation from the oscillators. Should this scrip cross the 500 mark convincingly and stay above it, the upmove is likely to get accelerated. Buy on advances. 

Your call of action - 

• Investors / cash segment players - Buy once the scrip breaks out above the 500 levels with high volumes and stays above this threshold. Maintain a stop loss at the 492 levels and book profits at the 512 levels. 

• Aggressive F&O traders - Buy the April futures above the 500 mark and hold with a stop loss of Rs 5 and a profit motive of Rs 10.

• Derivatives contract size - Market lot = 550, F&O margins = approx Rs 50,000 ( subject to change daily ).

GAIL - This counter has bounced back with a vengeance and has been moving in a bullish wedge as can be observed from the chart below. The breakout above the 240 mark will be a trend determinator for the counters immediate outlook. Should the scrip maintain levels higher than the 240 mark, expect the upmove to gain momentum. We recommend a buy on advances.

Your call of action - 

• Investors / cash segment players - Buy once a breakout above the 240 levels is achieved with high volumes and overall bullishness in the undertone. The stop loss levels will be the 233 mark and an immediate target of 250 is forecast.

• Aggressive F&O traders - Buy the April future above the 241 mark and hold with a Rs 237 stop-loss. Expect a price target of Rs 247 in the near term.

• Derivatives contract size - Market lot = 1500, F&O margins = approx Rs 70,000 ( subject to change daily ).

HCL Tech - This technology major is moving in a downward sloping channel and has been advocated by us a short sales candidate in the past. The momentum oscillators show the counter losing steam and the 30 day SMA to be a formidable resistance indeed.

Your call of action - 

• Investors / cash segment players - Sell the stock for delivery on all significant advances and exit the positions by 270 levels.

• Aggressive F&O traders - Sell the April futures above the 260 mark, keeping a stop loss at the 266 levels. We expect a price target of Rs 240 in the near / medium term.

• Derivatives contract size - Market lot = 1300, F&O margins = approx Rs 85,000 ( subject to change daily ).

Infosys - We re-affirm our bearish views on technology counters in light of the weakening US $ and the chart below shows a downward sloping channel. The oscillators are showing the possibility of a relentless fall. We advocate a short sale recommendation on all significant advances.

Your call of action - 

• Investors / cash segment players - Sell the counter for delivery from Rs 5200 onwards and exit completely at Rs 5500 levels. redeploy the resources in the old economy segment.

• Aggressive F&O traders - Sell the April futures short at the 5100 levels and maintain a stop loss at the 5220 levels. We expect the 4800 mark to be a possibility in the near / medium term. Options players may sell the April 5600 calls at a premium of Rs 60.

• Derivatives contract size - Market lot = 50, F&O margins = approx Rs 50,000 ( subject to change daily ).

ONGC - This counter has been an enigma for the market watchers as the futures trade at a steep discount to cash and yet the outstanding open interest keeps zooming higher. Refer to the derivatives newsletter for details. The  scrip is at a threshold level of a breakout and any close above the 880 mark with higher volumes and sustained premium to spot prices will turn the sentiments to positive for this scrip. We recommend a buy for traders.

Your call of action - 

• Investors / cash segment players - Buy the scrip for delivery above the 880 levels with a stop loss at the 850 mark and expect to book profits at the 910 levels in the near / medium term.

• Aggressive F&O traders - Buy the April futures above the 875 levels with a stop loss of rs 12 and a profit target of 895 in the near term. In a conducive market, we expect the 910 levels to be a reality.

• Derivatives contract size - Market lot = 300, F&O margins = approx Rs 55,000 ( subject to change daily ).

Satyam Computers - this technology counter is at divergence with it's peers in the industry as the chart pattern is exhibiting relative strength. This counter is not falling as much as the others and has managed a close above the bearish channel. We advocate a sell on major advances.

Your call of action - 

• Investors / cash segment players - exit from the counter in staggered lots above the 315 mark and bail out completely by the 325 - 330 levels - if these prices are seen.

• Aggressive F&O traders - Short sell the April futures above the 314 mark in small lots and hold with a stop loss at the 319 levels. We expect a price target of below 300 levels after results.

• Derivatives contract size - Market lot = 1200, F&O margins = approx Rs 80,000 ( subject to change daily ).

SBI - This banking major has signalled a breakout from a bearish trendline and the same trendline has seen a downward sloping triple top formation. Should the counter manage a sustained closing above the 605 mark, expect the bullish sentiments to continue. Buy in small lots only.

Your call of action - 

• Investors / cash segment players - Buy above the 615 mark and hold with a stop loss at the 605 levels and expect a target price of 634 in the near term. In a bullish market, even higher levels are possible.

• Aggressive F&O traders - Buy the April futures above the 623 mark and hold with a stop loss at the 616 levels, expect to book profits at the 635 mark in the short term, where partial profits maybe booked. In a bullish market, expect higher levels of 640 +.

• Derivatives contract size - Market lot = 500, F&O margins = approx Rs 55,000 ( subject to change daily ).

Tata Power - This counter was advocated as a very strong bet by us a few weeks ago as the scrip signaled a flag formation - which whipsawed as the markets tanked. The scrip is now showing that strength as the counter has bounced higher from it's previous lows. The oscillators are pointing towards a fresh upmove and a confirmatory close above the 405 mark will signal the completion of an inverted head & shoulder formation. The distance between the head and the neckline is 70 points and therefore an upward target of 470 is a logical conclusion in a conducive market. Buying is recommended on breakout.

Your call of action - 

• Investors / cash segment players - Buy above the 405 mark if the breakout is with high volumes. Maintain a stop loss at the 390 levels and expect partial profit taking at the 430 mark. Expect 450 in a few weeks

• Aggressive F&O traders - Buy the April futures above the 407 mark if the breakout is with high volumes. Maintain a stop loss at the 396 levels and expect partial profit taking at the 420 mark.

• Derivatives contract size - Market lot = 800, F&O margins = approx Rs 65,000 ( subject to change daily ).

BSE Sensex - The Sensex is moving in a bearish channel and is on the verge of a breakout. For the weak trend to reverse, a sustained closing above the 5820 levels is required and that too with higher volumes and positive market breadth. On the higher side, expect resistance at the 6,000 mark. Support is likely to the 5625 levels in the coming week.

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 1850 levels. Short term oscillators are showing optimism and a confirmatory breakout above the 1865 levels and a sustained close above this mark is required. Traded volumes need to improve significantly and so do the outstanding open interest figures. The immediate target is the 1905 mark and take a fresh look beyond this levels. Immediate support is likely at the 1780 levels.

Your  call of  action - We advocate fresh trades on the Nifty on the long side only on a confirmed beakout above the 1865 mark and that too in small lots. Expect a Rs 20 - 25 upmove where profits need to be locked in. Keep a stop loss of Rs 16.

Have a  profitable week.

 

Vijay L Bhambwani

Ceo :- Bsplindia.com

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 any securities mentioned  above.

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