The Professional Ticker Reader TM
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Flavours of the week                                                            July 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.

Individual stocks.

Glaxo - This MNC pharma major is a market out-performer with a relative strength reading of over 250 % ! We recommend a buy for the discerning delivery based investor with a timeframe of 5-6 months on all declines upto 570, in small averaged lots. Expect the counter to accelerate upward movements only above the 625 levels are surpassed on a closing basis.

Your call of action  

  • Investors / cash segment players - Buy on all declines in small lots with a view to average down upto the 565 - 570 levels. Maintain a stop loss at the 555 level and expect to see 665 - 680 levels in a conducive market in 5-6 months. 

  • Aggressive F&O traders - derivatives n/a.

  • Derivatives contract size - derivatives n/a.

Hero Honda -  This 2 wheeler major is in an uptrend and has signaled a breakout from a downward sloping channel. Since the breakout is achieved on good volumes and with confirmation from the momentum oscillators, the probabilities of a further appreciation is fair. Also note how the counter has stayed above the 30 WMA - a bullish indicator. The counter is a market out-performer and has a very high relative strength of 2400 ! We recommend a buy on the counter especially after the numbers announced in the month of June. 

Hero Honda - Weekly chart

Your call of action - 

  • Investors / cash segment players - Buy on declines of 500, maintain a stop loss of 477 and an upward target of 535 in a conducive market in 8 weeks timeframe. Buying recommended in small lots only.

  • Aggressive F&O traders - Buy the July futures ( quoting at Rs 10 discount to cash ) at 495 levels in minimal lots and hold with a stop loss at the 489 levels. Expect to book profits at the 505 / 508 levels in a firm market in the short term. Options traders can buy the July 480 calls at a premium of Rs 28 or lower.

  • Derivatives contract size - Market lot = 400, F&O margins = approx Rs 36,000 ( subject to change daily ).

Infosys - This software bellweather is showing signs of strength as the chart indicates a consolidation pattern within a bullish channel. The ocillators are showing signs of bullishness and supporting an upmove. The scrip is a strong market out-performer with a high RSC reading of 8800. A breakout above the 1450 levels will be a sign of further appreciation. The sector is witnessing a defensive buying due to neutral policy impact after the UPA govt came to power.

Infosys - Weekly chart

Your call of action - 

  • Investors / cash segment players - Buy the counter above the 1450 levels with a stop loss at the 1415 levels and a target of 1495 in the short term in a bullish market. Buy in small lots only.

  • Aggressive F&O traders - Buy the July futures ( quoting at Rs 8 discount to spot ) at the 1400 levels and hold with a stop loss at the 1380 levels. Expect to book profits at the 1435 - 1440 in a conducive market in the short term. Options traders may sell the July 1275 puts at Rs 20 or above in small lots only.

  • Derivatives contract size - Market lot = 200 shares. F&O margin approx Rs 36,000 ( subject to change daily )

Oriental Bank of Commerce - this banking stock is a wildcard in the markets and a higher risk recommendation. Should this scrip clear the hurdle of the 200 day SMA, expect the upmove to gain momentum and strength to return in the rally. Due to the risk attached to this reco, we recommend this trade in small lots that too for the high risk traders only. 

OBC - Daily chart

Your call of action - 

  • Investors / cash segment players - Buying is recommended only above the 258 levels if the rally is accompanied by higher volumes and the overall sectoral strength is seen. Purchases should be protected with a stop loss at the 251 and a target of 266 - 268 be expected. 

  • Aggressive F&O traders - Buy the July futures in minimal lots above the 256 levels and hold with a stop loss at the 252 levels. Expect to book profits at the 262 levels in a strong market.

  • Derivatives contract size - Market lot = 1200 shares, F&O margins = approx Rs 98,000 ( subject to change daily ).

Tata Tea - This FMCG major is showing signs of a consolidation and is on the threshold of a breakout from a channel formation. Should this formation be completed, a flaf formation will be made, which should see the scrip hitting the 425 levels in a firm market. We recommend a buy on a breakout for the high risk traders only.

Tata Tea - Weekly chart

Your call of action - 

  • Investors / cash segment players - Buy in small lots above the 390 levels and hold with a stop loss at the 375 levels. Expect to take profits at the 410 - 415 in a firm market in the short / medium term.

  • Aggressive F&O traders - Buy the July futures in small lots above the breakout of 387 in minimal lots and hold with a stop loss of 382 and a profit target of 394 in a strong market.

  • Derivatives contract size - Market lot = 550 shares, F&O margin = Rs 40,000 ( subject to change daily)

Tata Teleservices - This telecom player has been often recommended by us as a buy and is a market out-performer. The chart below shows a strong surge from the Rs 4 levels to a high of Rs 24. A 50 % retracement of the upmove will see strong supports at the 14 mark. The counter has a double top at Rs 24, above which a surge to the 34 levels maybe expected in a bull market. We recommend a buy for the delivery based buyers with atleast a 6 month view.

Tata Teleservices - Weekly chart

Your call of action - 

  • Investors / cash segment players - buy in a falling market in staggered lots and hold with a stop loss at the 14 levels. Expect a price of 21 - 22 in 8-10 weeks time in a bullish market and 35 in 6 months in a conducive market.

  • Aggressive F&O traders - derivatives n/a.

  • Derivatives contract size - derivatives n/a.

Indices - domestic

BSE Sensex - The Sensex is likely to encounter resistance at the 4945 levels in the short term and support at the 4811 in the near term. Beyond these levels, take a fresh look at the Sensex.

Sensex - Daily chart

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

Nifty 50 - The Nifty is showing signs of a rounding bottom formation in the making and if the index does not encounter resistance at the 1567 levels, expect the 1600 as the next logical target. On the lower side the crucial level to watch is the 1481 mark, below which a slide is likely to the 1450 levels.

Nifty 50 - Daily chart

Your  call of  action - We advocate fresh aggressive trades on the Nifty only after the budget. Till then, sell the July 1370 puts and the 1700 calls to avail of premia on both sides.

Trading tips for the  week

  • The put / call ratio is climbing and is currently at the 0.37 : 1 levels and the outstanding positions in the derivatives segment have shown a qualitative increase in the last fortnight. The FII investments are continuing steadily, but at a trickle. There is every indication that the current upmove is operator driven and unlikely to sustain unless stronger hands start buying..

  • The current week is crucial for the markets as the budget will be a major trigger for the markets and the trend will be ascertained only thereafter.

  • The index heavy-weights are showing strength again. This in turn will boost the indices and cause a feel good factor. The only worry is that this upbeat sentiment should continue.

  • 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.

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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