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.

Kirloskar Ferrous - this scrip was recommended in the previous weeks edition, has appreciated handsomely as the positive newsflow has seen operator / investor buying on the counter. The breakout of the 23 levels has been achieved and that too on extremely high volumes, that is likely to lead to continued focus on the scrip. There are unconfirmed reports of the company receiving a large export commitment for Toyota's international markets. Our target for the counter is 32 - 35 in a conducive market in 6 months.

Reliance Energy - this scrip was recommended last week as the sector was a beneficiary of the budget and the FM has announced the financial closure of 10 power projects in his budget speech in the parliament. The stock has been in a steady uptrend and trading above it's moving averages. The price graph shows higher tops and bottoms and a breakout is required to confirm the uptrend. The oscillators are showing a bullish undertone and are in a buy mode, with a confirmatory breakout above the 600 levels being a prudent trigger for bulls.

Reliance Industries - We have been advocating that this scrip will determine the market directions vide our derivatives newsletter since a month. That forecast has been amply justified as the counter has gained 10 % in 3 trading sessions and that too with higher volumes. With almost 10 % weightage in the indices, this scrip can swing the market moods significantly. The pre-result build up is likely to see the counter remaining in the limelight in the coming days.

Tata Teleservices - this is another small priced stock that we have been recommending to our investors with a fair degree of regularity and the scrip is performing as per our expectations so far. The company is aggressively re-structuring the operations and attempting to garner market share in the telecom space. Once it starts trading above the 21 levels sustainably, the upmove will gain momentum. The 15 Rs support is an important floor level to watch.

Tata Power - another player in the electrical power generation arena, this counter is showing signs of recovery after a steep fall from the 400 + levels recently. The stock is making rounding bottoms on the short term charts and the oscillators have signalled a buy. In a bullish market scenario, expect the counter to test the 200 day SMA mark, which is at the 310 levels - as a possibility.

Tata Steel - This steel major is in showing signs of accumulation as the market players build up positions in the F&O segment aggressively. The counter has seen the highest buildup last week in the August series, signalling a bullish expectation from the market players. Technically too, the counter is showing a crucial pattern as the price graph is critically poised below the 200 day SMA at the 370 mark. Should the counter trade consistently above the 200 day SMA, expect a fresh upmove.

BSE Sensex - The sensex is attempting to test it's channel top resistance and as we advocated last week, the outlook seems improved. The oscillators are pointing towards an upmove. The Sensex can test the 5120 mark before a sustained profit taking bout is seen cooling off the sentiments. On the lower end, expect support at the 4950 levels.

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

Nifty 50 - The Nifty is now trading above the psychological mark of 1600 after the May 11 2004 meltdown and is at the threshold of another 2-3 % upmove as the previous significant high is at the 1627 levels. The momentum oscillators are pointing towards a further upmove and should the 1610 levels be surpassed, the 1630 mark is achievable in the near term.

Your call of action - High risk traders may buy the August futures at the 1580 mark ( quoting at Rs 19 discount to cash ) and hold with a stop loss at the 1570 levels. Expect to book profits at the 1592 - 1596 levels. Options players can await liquidity in the Aug series before taking positions on the counter.

Dow Jones Industrial Average - The Dow Jones average has violated the 10,000 levels psychological support and is likely to test the previous lows of 9,700 levels. The noteworthy aspect of the chart pattern is the lower tops formation which implies weakness in the index. The momentum oscillators are in sell mode and point towards a fresh fall to 9,700 levels. On the higher side, expect resistance at the 10,150 mark.

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 - The Nasdaq is also showing a weakness in the chart formation as the index has cracked below the 1900 levels and the oscillators confirm a sell. The index headed for the 1810 mark in the coming week and 1910 levels will be the immediate resistance.

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 - Mirroring the US indices, this UK index is also in a downswing and headed for the 4230 levels support in the near term. On the higher end, expect resistance at the 4450 mark.

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 climbing and is currently at the 0.54 : 1 levels and the outstanding positions in the derivatives segment have shown a qualitative increase. The FII investments are continuing steadily. The bears are reluctant to square up their shorts and therefore, caution is advocated.
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 is crucial for the markets as there is the TCS IPO and therefore we expect a shift of focus & resources to the primary markets.
The Global Trust Bank fallout needs to be monitored before taking aggressive positions in the markets.
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.
The impeding expiry of the July series will see offloading and higher volatility 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.