The Professional Ticker Reader TM

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Flavours of the week                                                            Aug 08, 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 exhibited a breakout on the short term charts and has closed above it's 200 day SMA. The rally has been accompanied by higher volumes and a positive confirmation from the momentum oscillators. The scrip has closed at near it's highest levels in 8 weeks and is likely to rally further if the markets remain firm. We recommend a buy for traders.

Your call of action - 

• Investors / cash segment players - Buy the scrip at the 255 levels and hold with a stop loss at the 250 levels, expect to book profits at the 262 - 265 levels in the near term in a conducive market.

• Aggressive F&O traders - Buy the August futures at the 257 levels as long as the markets appear to be stable / firm, hold with a stop loss at the 253 levels and expect to book profits at the 263 - 265 levels. Options players can buy the 270 Aug calls at a premium of Rs 3. Income players can sell the Aug 220 puts at a premium of Rs 0.65

• Derivatives contract size - Market lot = 1500 shares, F&O margins = approx Rs 64,000 ( subject to change daily ).

Alok Textiles - this mid cap textile scrip was recommended a fortnight ago and has started moving higher after a consolidation phase. The scrip has not yet tested /violated it's 30 day SMA, which is a sign of strength. The counter will turn bullish once the 64 levels are surpassed as that is the immediate and last mile resistance. The scrip enters a new trading zone above 64 and should be bought by mid cap players.

Your call of action - 

• Investors / cash segment players - previous purchases maybe held with a stop loss at the 53 levels, fresh entry can be contemplated at the current levels with a stop loss at the 55 mark. Once the 64 levels are surpassed, expect the 68 - 72 levels in a conducive market in the near term. 

• Aggressive F&O traders - derivatives n/a

• Derivatives contract size - n/a.

Arvind Mills - This denim / textile major is going from strength to strength as the export momentum is reportedly building up and the sector itself is undergoing a bullish time. We recommend a hold / buy on the counter for the discerning & patient investor / trader. What is noteworthy is the higher tops and bottoms formation and the strong support provided by the 30 day SMA. The counter has provided multiple trading opportunities to traders and is expected to do so in the near future, as long as the markets remain conducive.

Your call of action - 

• Investors / cash segment players - buy the scrip on declines of 75 levels and hold with a stop loss at the 70 - 71 levels. Expect to book profits at the 80 - 82 mark in the near term.

• Aggressive F&O traders - Buy the August futures at the 77 levels and hold with a stop loss at the 74 mark. Patient traders may extend their stop loss to the 72.50 levels also. Expect profit taking at the 80 - 82 levels. Options players may buy the August 80 calls at a premium of Rs 3.40, income players can sell the August 65 puts at a premium of Rs 0.60 

• Derivatives contract size - Market lot = 4,300 shares, F&O margins = approx Rs 74,000 ( subject to change daily ).

BHEL - this PSU electricals major is showing signs of bucking the bearish trend as the scrip has closed near it's weekly high and it's short term moving average. The momentum oscillators are pointing towards an upmove. As and when the price graph surpasses the 567 levels on a closing basis on higher volumes, expect the counter to surge higher. We recommend a buy in confirmation of the upmove.

Your call of action - 

• Investors / cash segment players -buy in small lots above a closing of 567 and hold with a stop loss at the 549 levels. Expect to book profits at the 580 - 585 in a conducive market in the near term.

• Aggressive F&O traders - buy the Aug futures above the 565 mark and hold with a stop loss at the 561 levels, expect to take profits at the 571 levels.

• Derivatives contract size - Market lot = 600 shares, F&O margins = approx Rs 65,000 ( subject to change daily ).

Gujurat Ambuja Cements - this is another cement story that is in the limelight. The scrip is above it's 200 day SMA and above it's congestion levels of 10 weeks. The oscillators are pointing towards a bullishness in the undertone and we recommend a buy. 

Your call of action - 

• Investors / cash segment players - buy the scrip in small lots at the current levels and hold with a stop loss at the 295 mark. Expect profit taking at the 315 - 320 in a conducive market in the near term.

• Aggressive F&O traders - Buy the August futures above the 306 mark in a bullish market and hold with a stop loss at the 302 levels and a profit target of 311 in the near term. Should the sector see increased bullishness, even higher levels of upto 315 are possible.

• Derivatives contract size - Market lot = 1,100 shares, F&O margins = approx Rs 56,000 ( subject to change daily ).

Grasim - this counter was recommended last week and delivered the expected results as the 1040 - 1045 levels were achieved as per expectations. The scrip has gained further momentum as the sector play is in traders focus and the counter has closed above the 200 day SMA which is a bullish sign. The oscillators are supporting the upmove and the the outlook is positive on the counter.

Your call of action - 

• Investors / cash segment players - Buy the scrip in small lots at the current levels and hold with a stop loss at the 1015 levels. Expect profit taking at the 1075 - 1080 levels in the near term. 

• Aggressive F&O traders - Buy the August futures above the 1045 levels and hold with a stop loss at the 1022 levels. Expect profit taking at the 1065 - 1075 levels in a favourable market. 

• Derivatives contract size - Market lot = 350 shares, F&O margins = approx Rs 57,000 ( subject to change daily ).

Guj NRE Coke - another mid cap stock and a market out-performer which has been in the limelight for over a year. This metullargical coke manufacturer has been posting above expectation results. The bullish sentiments in the steel sector are rubbing off on this counter too. We recommend a buy for the delivery based patient investors - on declines.

Your call of action - 

• Investors / cash segment players - buy the counter on falls in a correcting market at the 58 - 60 levels. Hold with a stop loss at the 52 levels and expect to book profits at the 74 - 76 levels in the short / medium term as long as the steel sector and markets are positive.

• Aggressive F&O traders - N/a.

• Derivatives contract size - N/a

Hind Lever - this FMCG bellweather counter has been the back bone of our fixed income recommendations for the simple reason that the counter has been falling unfailingly. The fundamentals have been weak and the stock has been reduced from many an institutional portfolio. Though the scrip is expected to be a lack lustre play for aggressive traders, it provides excellent opportunities for income players and very patient long term players who can buy on significant falls for a 15 - 18 month perspective.

Your call of action - 

• Investors / cash segment players - buy the scrip as close to the 100 Rs mark as far as possible and hold with a stop loss at the 88 levels with a 15 month perspective. Expect a 130 - 150 level in that time frame. Being a long term recommendation, we suggest buying in small lots only.

• Aggressive F&O traders - income sensitive players can sell the 130 Aug calls at a premium of Rs 0.75

• Derivatives contract size - Market lot = 2,000 shares, F&O margins = approx Rs 40,000 ( subject to change daily ).

ITC Ltd - this FMCG major is showing signs of high relative strength as the counter is managing to trade above it's 200 day SMA and at it's 3 month highs. The immediate congestion levels are the 1065 levels and should the counter close above this level with higher volumes, expect a fresh upmove that can test the 1100 mark in a conducive market scenario. We recommend a buy on a confirmatory breakout.

Your call of action - 

• Investors / cash segment players - .

• Aggressive F&O traders - .

• Derivatives contract size - Market lot = 300 shares. F&O margin = approx Rs 53,000 (subject to change daily )

MTNL - this scrip is a market under-performer and moves in a narrow range, which makes it unpopular with traders. For income sensitive players, it offers opportunities for two way options writing or a uni directional  view. Currently, the market moods are cautious and this scrip is likely to fall faster than the bench mark indices. The scrip has closed below it's 200 day SMA and the oscillators are pointing towards lower levels once the 122 mark is tested / violated. The oscillators are confirming the weakness on the counter.

Your call of action - 

• Investors / cash segment players - n/a

• Aggressive F&O traders - income sensitive players can write the 150 August calls at a suggested premium of Rs. 0.90 in small lots.

• Derivatives contract size - Market lot = 1,600 shares, F&O margins = approx Rs 39,000 ( subject to change daily ).

Tata Tea - this is another FMCG story and a market out-performer as the chart pattern shows a breakout above the bearish channel ( now confirmed as a flag formation ). Should the markets be conducive, expect the flag formation to result in the price graph testing the 455 - 465 levels in the short / medium term. Before the upmove can commence, it is likely that a pullback downwards maybe seen to the channel top at the 385 levels. We recommend a buy on declines. 

Your call of action - 

• Investors / cash segment players - buy on significant declines upto the 385 levels and maintain a stop loss at the 365 levels. Expect profit taking at the 410 - 420 levels in the short / medium term.

• Aggressive F&O traders - Buy the August futures on declines to the 390 levels and hold with a stop loss at the 384 levels. Expect profit taking at the 404 levels in a conducive market.

• Derivatives contract size - Market lot = 550 shares, F&O margins = approx Rs 35,000 ( subject to change daily ).

Tisco - this counter has been the toast of the markets for a fortnight and has seen the highest open interest in calls/ futures and traded volumes in the cash segment. The scrip faces resistance at the 410 levels and needs to surpass that mark to embark on the next leg of the upmove. We had projected the upside target fairly accurately on this counter last week and the scrip has met our expectations. There is a likelihood of a fall taking the stock to the 385 - 390 mark before the stock goes ex-bonus in the coming week.

Your call of action - 

• Investors / cash segment players - avoid fresh commitments.

• Aggressive F&O traders - Buy the August futures only above the.412 levels that too near the closing levels with high volumes traded. Maintain a stop loss at the 407 levels and a target of 418 - 421 in the near term. On the lower side, should the Aug futures slip below the 399 levels, short sell for short term / intraday with a target of Rs 392 in small lots.

• Derivatives contract size - Market lot = 900 shares, F&O margins = approx Rs 72,000 ( subject to change daily ).

BSE Sensex - the index is showing a fall as the 200 day SMA has proved to be a formidable hurdle that the benchmark has been unable to surpass for over 10 weeks. The immediate support will be at the 5120 levels and the upsides are likely to be capped at the 5250 in the absolute short term. Only above the 200 day SMA with high volumes, will a fresh upmove commence.

Your  call  of  action - Since the Sensex futures are not very liquid, we suggest trading  the Nifty 50  instead.

Nifty 50 - The Nifty has surpassed the downward sloping channel and is yet to clear the 200 day SMA similar to the Sensex. The immediate support is the 1605 levels, which should not be violated, if the upmove is to continue. On the higher side, expect resistance at the 1660 levels which will be the immediate hurdle. Above the 1660 mark, expect 1684 to be the next target.

Your  call of  action - Income traders can sell the 1500 August puts at a suggested premium of Rs 6.50 and above in minimal lost only.

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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