The Professional Ticker Reader

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.

BHEL - This PSU electricals major has been in an uptrend and a strong market out-performer. We have been advocating this scrip repeatedly and the counter has lived up to our bullish expectations. The counter ready to breakout above a short term congestion zone once it closes above the 575 mark and if the upmove is accompanied by heavier volumes, the pattern is confirmed. We recommend a buy.

Gas Authority - this gas pipeline major has been a prolific feature of our newsletter and has been recommended vide our editions dtd 02/08/03, 09/08/03, 16/08/03, 23/08/03, 11/10/03, 01/11/03, 08/11/03, 29/11/03, 06/12/03, 13/12/03, 18/01/04, 25/01/04 & 02/02/04 ( click here to view our previous editions ). The stock has been volatile and tested the patience of investors as the disinvestment process has been delayed and under a cloud. Now that the dates are out finally, there is clarity in the sentiments. The short term momentum oscillators are turning higher from oversold levels and we expect the scrip to appreciate 10 % shortly. We recommend a buy on significant declines as the outlook remains positive on the sector and stock in the medium / long term.

Glaxo - This stock is another regular feature in our newsletters and we feel all investors should add this pharma major in their portfolio as a "must have". The recent results have been superlative and the company has announced a hefty dividend. There are talks of a stock buy-back and acquisition of brands to consolidate the company's position in the market place. This company is by and far the biggest beneficiary of the IPR regime from 2005 onwards. We recommend a buy.

ICICI Bank - This banking major has been a regular feature in our recommendations and has out-performed our bullish projections. Being a new-age private sector bank, the growth rate has been superlative and the loan portfolio is far above average. The banks e-enabled thrust and aggressive capturing of the market share has been the main trigger in the bullishness. The recent upgradation by international agencies of the Indian banking system is good news for this company as it can avail of cheaper capital in the overseas markets. The counter has signalled a breakout and is a buy.

Infosys - This technology major has been the bell weather software counter and a market performer in the recent rally. The company is an entrant in the billionaires club and has been raising future guidance over a period of 2 quarters. The last week has seen a firmness in the technology sector and the scrip is showing an advance rally on the short term momentum oscillators. The price is on the verge of breaking out of a classic SMA crossover and that makes this scrip a short term buy.

IPCL - This petrochem major has been slipping faster than the broader markets after the elections were announced and a larger fear of a delay in the disinvestment. However, with the announcement of the dates of the same, the counter is showing signs of revival and the 200 day SMA is proving to be a major domo support in the short term. We recommend a buy on slight advances which will confirm the upmove.

Maruti - we have been recommending a buy on this automobile powerhouse as the numbers expected from the company suggest that the counter is likely to see rapid upmoves based on fundamental and technical strength. Previous recommendations were made vide our editions dtd 18/10/03, 08/11/03, 03/01/04, 25/01/04 & 02/02/04 ( click here to view our previous editions ). The 30 day SMA is proving to be a good support and the same is poised at the 420 levels. We recommend a buy on declines for the patient investor.

BSE Sensex - Last week, we predicted that this correction is the first meaningful one after November 2003 and the same is being proved by the wild gyrations in the market prices. The resistance was advocated at the 5850 levels which was not achieved. The support at the downside was advocated at the 5550 levels which has been justified. Should the Sensex cross the 5890 with high volumes and a positive market breadth, expect the 5950 - 6000 levels to be a reality.

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 see high volatility with support at the 1750 levels ( click here to view our previous editions ). The support has not been violated and the short term momentum oscillators are pointing towards a rally. We expect high consolidation in the coming week ( just as we had last week too ) as stocks are expected to change hands from weaker to stronger hands. Only above a conclusive closing over 1890 levels, with higher volumes and a positive breadth, will the next upward target be achieved. Till then, we expect every major advance to be a sell signal for the bears.

Your call of action - We advocate fresh trades on the Nifty on the long side only on declines that too in an indirect fashion by selling puts or buying calls to be on the safer side. Sell the February 1700 puts at a premium of Rs 14 or above - that too in limited quantities. More aggressive traders can buy the Feb futures at current prices and hedging the position by selling the Feb 1960 calls at a premium of Rs 12 - 14. Alternative strategy # 2 - buy the Feb futures at current prices and buy the Feb 1750 puts at Rs 15 premium.

Dow Jones Industrial Average - This old economy benchmark index measures the outlook on the New York stock exchange. Last week we had advocated resistance at the 10,750 levels ( click here to view our previous editions ) which proved a major hurdle for the markets. The Dow Jones has under performed as compared to the Nasdaq and is likely to remain under pressure till it surpasses the 10750 levels with heavy volumes. Expect the 10,280 levels to be a good short term base for this index in the near term.

Dow Jones - Weekly chart

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. This index has made a new 30 month high ( highest since July ' 01) recently and has been advocated by us as making a saucer formation. The relative strength of this index is surpassing the Dow. Last week, we forecast that the 2000 levels will be a short term support and the index took support at the 2013 mark ( click here to view our previous editions ). The 2000 levels would remain a good base for this index. This level has been proved accurate, and above a 2175 close, expect the next resistance at the 2240 - 2250 levels.

Nasdaq - Weekly chart

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. As we have been forecasting a 4300 level support, this index is making a base in the near term and showing short term weakness ( click here to view our previous editions ). Our outlook though mildly positive for this index is also that of an under-performer as compared to the US markets. The oscillators are pointing towards a fall at present levels - only above a conclusive close above 4560 levels, will a new rally start.

FTSE - Weekly chart

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 put / call ratio is steady at the 0.15 : 1 levels and the outstanding positions in the derivatives segment have decreased significantly. The FII investments are steady. The Nifty and Sensex being under pressure, expect sharper volatility.
There is offloading at higher levels in stock futures. That indicates a cautious approach as long positions in individual stocks is being hedged by Nifty shorts.
The current week holds out hope for the bulls as the vote-on-account budget and lower margins in FnO will make it easier for the bulls to buy / hold long positions in the current month.
The index heavy-weights are showing bar reversals at new highs. This fact was also mentioned in the previous week. This is a worrying indicator in the near term.
Trades must be executed in small volumes due to the higher volatility expected. Trade fewer counters and conserve cash for future opportunities.
Standby for fresh recommendations via SMS on a real - time basis.

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.