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.

Arvind Mills - the textile major is showing signs of significant strength as the stock is a market performer and is rising as news of re-structuring of the company and re-rating of the sector has changed the sentiments for the better. The stock is facing pressure as the markets are in a volatile phase recently. The immediate support at it's 13 week moving average would be a good entry point for investors with a medium term perspective. The noticeable aspect about the chart pattern is the fall being accompanied by lower volumes. That makes the selloff a result of routine profit taking rather than panic sales. We recommend a buy on declines.

Bharat Electronics - This PSU electronics major is in a major uptrend and is making consistent highs. We have recommended this stock earlier vide our editions dtd - 19/07/03, 30/08/03, 06/09/03, 11/10/03, 29/11/03 and 20/12/03 ( click here to view our previous editions ). The relative strength is extremely high and that makes this counter a market out-performer. The company is likely to have a strong order book position running over the next 3 years and is a major defense equipment supplier. The scrip receives good support at it's short term average and is a good buy at those levels. The stock has confirmed a breakout above the bullish upward sloping channel. We recommend a buy on declines.

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 ( click here to view our previous editions ). The stock has appreciated since then and paid rich rewards to our investors. The recent fall has been triggered by elections being announced and a result a feeling that the IPO ( initial public offering ) maybe hurried up, even at a lower price. The stock has also been over-extended and therefore a corrective fall was in order. We recommend a buy on significant declines as the outlook remains positive on the sector and stock in the medium / long term.

Hind Lever - this counter has been long advocated by us a market under-performer and makes an ideal fixed income play as the upsides tend to limited and excessive expectations have been built into the scrip. We have recommended this counter in our past editions dtd - 19/07/03, 02/08/03, 09/08/03, 26/10/03, 02/11/03, 22/11/03 & 06/12/03 ( click here to view our previous editions ). We suggest selling calls at out of money strikes.

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 & 11/01/04 ( click here to view our previous editions ). 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.

ONGC - This counter was identified by us since the price was 630 and has yielded handsome rewards to bulls. The profit taking in the pre-election scenario is an ideal time for patient investors to start nibbling into the counter. The retail thrust and international forays are a major boost for the company. The investor / trader / FII interest is expected to remain strong on this counter in year 2004. The price retracement theory suggests a support at the 790 levels which is a 50 % fall from the top in the rally that started from 585. We recommend a buy.

Ranbaxy - this counter has been our favoured pharma stock and the sector has been advocated by us as a beneficiary of the excessive volatility in markets in the near term. The current downward pressure due to management shuffle is a good time for patient investors to enter into a sound story for the year 2004. We recommend a buy on all declines. The counter has been profitably recommended earlier vide our editions dtd 07/06/03, 14/06/03, 28/06/03, 05/07/03, 12/07/03, 23/08/03, 02/11/03, 20/12/03, 27/12/03 & 03/01/04 ( click here to view our previous editions ).

Reliance - this market leader has been advocated by us a scrip likely to lead the markets from the front. The scrip has not failed to live upto our expectations and is a market out-performer by a wide margin. Previously recommended vide our editions dtd 07/06/03, 14/06/03, 21/06/03, 05/07/03, 26/07/03, 02/08/03, 09/08/03, 23/08/03, 30/08/03, 06/09/03, 20/09/03, 27/09/03, 04/10/03, 11/10/03, 26/10/03, 01/11/03, 08/11/03, 20/12/03, 27/12/03 & 03/01/04 ( click here to view our previous editions ). The stock has shown tremendous resilience as it has bucked the trend and maintained a strong undertone inspite of profit taking in the overall markets.

BSE Sensex - Last week, we predicted a level of 5950 as a support for the Sensex - and resistance at the 6250 - 6265 levels. The Sensex has closed at 5946 - just 4 points away from our target after seeing a intra-week high of 6248 !!!. 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 support base at the 5780 levels and consolidation in the coming week. We have earlier predicted that this correction is the first meaningful one after November 2003 and the same is being justified by the market movements.

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 highs of 2115 and support at the 1900 levels. The intraweek highs and lows were 2000 / 1887 and the Nifty closed at 1901 !! ( click here to view our previous editions ). The fresh target for the index is at the 1850 levels in the week ahead. Further down, expect support at the 1820 levels in the week ahead - that is the first level as per the retracement theory. We expect high volatility 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 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 1800 puts at a premium of Rs 7 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 10,600 - 10,675 levels & support at the 10200 ( 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 10750 levels. 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 2180 then 2230 levels will be a short term target and the Nasdaq has closed at 2140 also the intra week high. ( click here to view our previous editions ) The outlook has turned positive after improved employment data and the short term target of 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 - 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 0.22 : 1 levels and the outstanding positions in the derivatives segment have decreased significantly. The FII investments are slowing down and pre-election outlook is 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 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.
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. 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 positions in the Nifty options mentioned above.