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.

Bank of India - this PSU banking major was recommended earlier vide our editions dtd 18/10/03, 26/10/03, 28/12/03 and 04/01/04 ( click here to view our previous editions ). The previous weeks recommendation of buying above 71 levels and squaring up at 78 levels has been highly profitable and the trade has been closed successfully. The chart pattern is suggestive of higher tops and bottoms formations and the 30 week SMA is a good support on the short term charts. The stock is a market performer and a continous closing above the 74 levels should see a decent appreciation of 8 - 10 % in the near term.

E Serve - This back office software solutions provider has been recommended by us earlier vide our newsletters dtd - 19/07/03, 30/08/03 & 20/12/03 ( click here to view our previous editions ). This stock has been a muti-bagger since we first recommended it and is a market out-performer in the true sense of the word. Notice the relative strength comparative oscillator which shows a reading of 1300 +. That means a strength of over 13 times as compared to the Sensex. A conclusive close above the 795 will propel this stock in a new bull zone and see an accelerated rally. We recommend a buy for the patient delivery based investor.

Gujarat Ambuja Cements - This cement major has been recommended by us earlier vide our editions dtd - 07/06/03, 14/06/03, 12/07/03, 19/07/03, 26/07/03, 02/08/03, 09/08/03, 26/10/03, 01/11/03 & 13/12/03. ( click here to view our previous editions ). Early bird investors who have been our subscribers and have caught this stock below 200 have seen significant profits accrue on this counter. This counter is another market out-performer with a high RSC ( relative strength comparative ) of over 220 !! The sector itself is under going bullishness and the pre result bullishness is likely to be a fillip for this counter. We recommend a buy in small quantities.

Glaxo - This MNC pharmaceuticals major has been a market out-performer as it has a relative strength of over 340 % as compared to the Sensex and has been frequently and profitably recommended in our earlier editions dtd - 14/06/03, 21/06/03, 05/07/03, 19/07/03, 15/08/03, 23/08/03, 30/08/03, 13/09/03, 20/09/03, 11/10/03 & 20/12/03. We believe a higher volatility in the broader markets should see a defensive buying in the pharmaceutical stocks as the sector is seen as a safer haven for resources during turbulent markets. The main triggers will be the improved prospects for the MNC majors in the fast approaching EMR / IPR ( exclusive marketing regime / intellectual property rights regime ) as specified by the WTO, by 2005. The product patent regime will see new drug launches and higher growth impetus. The price graph is factoring / mirroring these events. We recommend a buy.

Oriental Bank of Commerce - This banking major has been making new highs and is a sheer market out-performer. The short term moving average is an immediate support and the stock has never closed below this average but once since November 2002. The weekly bar chart below has signalled a breakout above the 277 mark and should the counter remain above the 265 levels, expect the bullishness to continue. We recommend a buy on advances in a firm market.

Polaris Software - This second rung software stock is showing signs of a saucer formation as the sector is under going re-rating. The forward guidance by Infosys is likely to breathe life into the sector, should the markets remain conducively firm. We have been recommending this banking / finance software applications provider in the past vide our editions dtd - 11/10/03, 29/11/03 & 06/12/03 ( click here to view our previous editions ). We recommend a buy in very small lots only.

Rolta - this smaller cap software company is in the business of CAD / CAM and topographical applications. The stock is showing a classic saucer formation as the price graph and oscillators are moving in tandem - upwards. The stock is a market out-performer and enjoys a high relative strength. The stock was earlier recommended via our editions dtd - 20/12/03 and 27/12/03 ( click here to view our previous editions ) and has met our bullish expectations. The stock will see a good base at the 106 levels and above the 125 mark, will see 140 / 145 levels in a firm market. We recommend a buy for the delivery based investor / trader with patience.

Zee Telefilms - this counter was recommended on 26/10/03, 20/12/03, 28/12/03 & 04/01/04 ( click here to view our previous editions ) and has appreciated handsomely as the stock has been a market performer recently. As long as the scrip remains above the 155 mark, expect the upward momentum to remain intact. The media sectors re-rating is likely to see this scrip getting higher valuations also. Buying recommended for the cash segment players.

BSE Sensex - Last week, we predicted a level of 6120 as a achievable target for the Sensex - though the Sensex has seen intraweek highs, the closing has been exactly at 6120 levels !!!. Our daily PTR edition has been advocating resistance at the 6250 - 6265 levels and intraweek highs have proved this level to be accurate. Only a conclusive closing above the 6265 levels with high volumes and a positive market breadth will see a next bullish phase unfolding. Till then, expect a strong base at the 5950 levels and consolidation 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 show strength. We predicted a 1970 - 1990 level on the Nifty, which was achieved ( click here to view our previous editions ). The fresh target for the index is at the 2115 levels in the weeks ahead - but only after a consolidation phase. On the lower side, expect support at the 1900 levels in the week ahead. We expect high volatility in the coming week as stocks are expected to change hands from weaker to stronger hands. Only above a conclusive closing over 2025 levels, with higher volumes and a positive breadth, will the next target be achieved.

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 January 1840 puts at a premium of Rs 9 or above.

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 10,740 levels ( click here to view our previous editions ). The Dow Jones has under performed as compared to the Nasdaq and is likely to see resistance at the 10650 - 10675 levels. Expect the 10,200 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 29 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 2090 levels will be a short term target and the Nasdaq has closed at 2087 - 3 points away from our target !!!. ( click here to view our previous editions ) The outlook has turned positive after improved employment data and the short term target of 2180 then 2230 should be expected.

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 strength ( click here to view our previous editions ). Our outlook though positive for this index is also that of an under-performer as compared to the US markets. The oscillators are pointing towards a consolidation at present levels.

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 0.24 : 1 levels and the outstanding positions in the derivatives segment have increased significantly. The FII investments are positive and pre-result outlook is positive. The Nifty and Sensex being in new highs, expect sharper volatility.
The Nifty shorts are now marginally higher than the Nifty longs. That indicates a cautious approach as long positions in individual stocks is being hedged by Nifty shorts.
The index heavy-weights are showing bar reversals at new highs. This is a worrying indicator in the near term.
The news of positive employment data will help the US $ and in turn the technology sector in the domestic markets. The Nasdaq is climbing faster than the Dow Jones average and that could see tech stocks ruling firm. That should boost the indices as tech stocks are heavily weighted in the indices.
Stocks that are due for results announcements are likely to see highly polarised trading volumes in the near term.
Trades must be executed in small volumes due to the higher volatility expected.
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 positions in the Nifty options mentioned above.