The Professional Ticker Reader TM

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Flavours of the week                                                            July 31, 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.

Arvind Mills - This counter has been a frequent feature of this newsletter recently and has been living up to our bullish expectations. The counter has been a market out-performer on the short term charts and has been getting good support on the 30 day SMA. The higher tops and bottoms formation is continuing and that leaves the uptrend intact. We recommend a short term buy in small lots for traders.

Your call of action - 

• Investors / cash segment players - buy the scrip at the 75 / 76 levels and hold with a stop loss at the 71 levels. Expect to book profits at the 80 - 82 levels in a conducive market in the near term.

• Aggressive F&O traders - Buy the Aug futures at the 76 levels and hold with a stop loss at the 73 mark. Expect profit taking at the 80 / 81 levels in the short term in a bullish market.

• Derivatives contract size - Market lot = 4,300 shares, F&O margins = approx Rs 80,000 ( subject to change daily ).

Grasim - this cement / textiles major is showing short term strength as the bottoms are rising along the short term trendline as shown in the graphic below. The cement sector is showing strength as the peers in the segment are also rallying higher on short term charts. Grasim will face short term congestion at the 1005 levels, which the counter must surpass to rally higher. The confirmatory upmove must be accompanied with higher volumes and a rising open interest in the F&O segment, which will lend credibility to the upmove.

Your call of action - 

• Investors / cash segment players - buy the scrip above the 1005 levels, especially if the closing is above this level with higher volumes. Hold with a stop loss at the 990 levels and expect a target price of 1025 in the near term. Should the markets remain bullish, expect 1040 levels as a possibility.

• Aggressive F&O traders - buy the August futures above the 1010 levels especially if a close above this level is achieved. Hold with a stop loss at the 997 levels and expect a target price of 1025 in the near term.

• Derivatives contract size - Market lot = 350 shares, F&O margins = approx Rs 58,000 ( subject to change daily ).

Indian Oil Corporation - this oil PSU major is showing signs of testing it's congestion zone and rallying past the immediate hurdle provided by the trendline marked at the 412 levels. That level has been a triple top and therefore a crucial threshold level to watch. The stock has stayed below this level for 10 weeks and a breakout above this resistance with high volumes should see the 200 day SMA being the immediate target for bulls. We recommend a buy on the confirmation of a breakout.

Your call of action - 

• Investors / cash segment players - Buy the scrip only after a sustained closing above the 410 levels and that too on high volumes. Hold with a stop loss at the 395 levels and expect to book profits at the 425 - 427 levels in a conducive market in the near term.

• Aggressive F&O traders - buy the August futures above a breakout level of 402 and hold with a stop loss at the 395. Expect profit taking at the 412 levels in a conducive market in the short term. It is important that a breakout be confirmed before traders initiate a buy.

• Derivatives contract size - Market lot = 600 shares. F&O margin = approx Rs 55,000 (subject to change daily ).

ONGC - this oil and gas major is showing signs of consolidation within the channel between the 605 and the 720 levels. After a sideways movement for three months, the scrip is testing it's upper end of the channel and is poised for a breakout if a sustained close above the 725 levels is achieved with high volumes. The moving averages are showing a bullish picture and the oscillators are confirming an uptrend as the scrip makes higher bottoms. On the fundamental front, the recent petrol / diesel price hike is a positive indicator for the stock as the company's bottomline gets a boost. We recommend a buy on a confirmatory breakout.

Your call of action - 

• Investors / cash segment players - buy the counter above a close of the crucial 725 levels with higher volumes. Hold with a stop loss of 705 levels and expect to book profits at the 750 - 755 in the near term. Should the markets remain strong, marginally higher levels are possible.

• Aggressive F&O traders - Buy the August futures above a confirmatory close above the 727 levels. Hold with a stop loss at the 714 levels and expect to book profits at the 740 - 745 levels.

• Derivatives contract size - Market lot = 300 shares. F&O margin = approx Rs 44,000 (subject to change daily )

Reliance Industries - this counter has been recommended by us as a market mover in the derivatives denizen newsletter since a month and has lived upto it's expectations. Traders may note how the counter has broken out above it's downward sloping channel which is 10 weeks old, therefore of significant importance to technical traders. The breakout has occurred on high volumes and a positive confirmation on the oscillators. Using advanced price projection techniques, we can measure the extent of the upmove remaining based on the depth of the trading channel ( between 400 - 440 levels ) and project the immediate hurdle at the 496 - 502 mark. Traders with a higher risk appetite are advised to buy in small lots.

Your call of action - 

• Investors / cash segment players - buy the scrip at the 485 levels and hold with a stop loss at the 477 mark, expect to book profits at the 497 levels in the near term in a conducive market. Should the markets be exceptionally firm, expect higher levels of 502 - 505. 

• Aggressive F&O traders - buy the August futures at the 488 mark and hold with a stop loss at the 482 levels. Expect to book profits at the 497 levels in the near term in a firm market. Income players can sell the August 420 puts at a premium of Rs 1.50 or above.

• Derivatives contract size - Market lot = 600 shares. F&O margin = approx Rs 50,000 (subject to change daily )

Satyam Computers - this software major is undergoing consolidation between the narrow channel between the 290 - 345 levels. The outlook has turned positive in the recent weeks as the scrip is trading at the upper end of the channel and the momentum is building up on the higher side, making the chances of a breakout as fairly high. The oscillators are supporting a rally and a price confirmation is required by way of a continous close above the 345 levels with high volumes of over 75,00,000 shares per day. We recommend a buy on a breakout.

Your call of action - 

• Investors / cash segment players - buy the counter above the 345 levels and hold with a stop loss at the 337 levels. Expect to book profits at the 358 - 360 in a good market in the near term.

• Aggressive F&O traders - Buy the Aug futures above the 342 levels and hold with a stop loss at the 338 levels. Expect to book partial profits at the 348 mark, and complete profits at the 355 mark. Options players can buy the August 360 calls at a premium of Rs 5. Income players can sell the August 300 puts at a premium of Rs 2.50 or above. 

• Derivatives contract size - Market lot = 1,200 shares. F&O margin = approx Rs 67,000 (subject to change daily )

Tata Motors - this automobile major is in a short term congestion channel and is preparing for a bullish breakout as the markets trend higher. A confirmatory close above the 428 levels would be a buy confirmation especially with high volumes in excess of 85 - 90 lac shares on the NSE. The momentum oscillators are confirming a rally on the charts. We recommend a buy on a breakout.

Your call of action - 

• Investors / cash segment players - buy the scrip above the the 427 levels and hold with a stop loss at the 421 levels. Expect to book profits at the 440 mark in a conducive market in the short term.

• Aggressive F&O traders - Buy the August futures above the 427 levels and hold with a stop loss at the 423 mark. Expect profit taking at the 435 - 437 levels in the near term. Income traders can sell the August 370 puts at a premium not exceeding Rs 2.50

• Derivatives contract size - Market lot = 825 shares. F&O margin = approx Rs 59,000 (subject to change daily )

Tata Steel - this steel major is quite simply the scrip of the week. Last week, we had advocated in the derivatives newsletter that this scrip would be a market mover in conjunction with Reliance and the scrip has lived up to it's expectations. The counter has seen the highest outstanding open interest, highest traded options in the top 5 list and the highest rollover in the latest F&O series. Noteworthy is the aspect that the breakout over the downward sloping trendline has been accompanied by high volumes, positive confirmation of the oscillators and a rally past the 200 day SMA. The trendline is 7 months old and the breakout is very relevant. We recommend a buy for the high risk traders

Your call of action - 

• Investors / cash segment players - buy the scrip at the 385 levels and hold with a stop loss at the 377 mark. Expect to book profits at the 400 - 405 levels in a conducive market in the near term.

• Aggressive F&O traders - buy the August futures above the 397 mark and hold with a stop loss at the 393 levels. Expect profit taking at the 402 - 404 levels. Income players can sell the August 280 puts at a premium of Rs 1.50 or above.  

• Derivatives contract size - Market lot = 900 shares. F&O margin = approx Rs 74,000 (subject to change daily )

Tata Tea - this counter was recommended by us ever since a breakout was achieved over the 385 mark. The counter has signalled a confirmation of a breakout since then and has consolidated it's gains. Price projection techniques point towards a target price of 440 - 445 in the near term in a conducive market. We recommend a buy.

Your call of action - 

• Investors / cash segment players - by the scrip at the 410 - 412 levels and hold with a stop loss at the 390 mark. Expect profit taking at the 430 - 435 mark in the near term.

• Aggressive F&O traders - Buy the August futures above the 417 mark and hold with a stop loss at the 412 levels. Expect profit taking at the 425 levels in a conducive market in the short term. 

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

BSE Sensex - the Sensex has signalled a breakout of a bear channel and is poised to test the 200 day SMA provided the 5225 levels are surpassed on a sustained closing basis. On the lower side, expect support at the 5070 levels 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 - The Nifty is showing similar patterns like the Sensex and a confirmed breakout above the downward channel has been seen. The momentum oscillators are confirming a bullish outlook and the a significant close above the 1637 mark will see a 1660 level in the near term We recommend a buy.

Your  call of  action - Buy the Aug futures when the cash Nifty surpasses the 1638 levels, preferably on a closing basis. Hold with a stop loss of Rs 12 and expect to book profits near the 1655 - 1660 in the cash segment equivalent.

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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