The Professional Ticker Reader TM

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Flavours of the week                                                            June 12, 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.

Andhra Bank - This bank has shown a rapid fall from the 70 plus levels in two calendar months and is now trading below it's 200 day SMA. That is a sign of weakness, and another negative indicator is the fact that the scrip has encountered stiff resistance at the 13 day SMA since  April 2004, and has not managed to close above this average for more than 2 sessions ! Currently, the stock is at the threshold support of 44 levels and should it break this support, a 10 % fall is expected rapidly. The RSI is pointing towards a weak trend and the short term momentum oscillators ( RoC ) is also indicating negative momentum. We recommend short selling for the savvy trader.

Your call of action - 

• Investors / cash segment players - delivery based traders are advised to stay away from fresh investments and exit from existing holdings, if any.

• Aggressive F&O traders - sell the June futures at the 45 levels and maintain a  stop loss at the 48 levels. Expect to book profits at the 40 levels in the near term, in a conducive market. Alternately, sell the June 52.50 strike calls at a suggested premium of Rs 0.40 and above.

• Derivatives contract size - Market lot = 4600 shares, F&O margins = approx Rs 73,000 ( subject to change daily ).

ACC - This cement major is showing signs of weakness as the chart pattern shows lower tops and bottoms formation. The oscillators are pointing towards a fall and the scrip is trading marginally above it's short term support of 238 levels. The directional movement indicator is pointing towards a build-up of negative momentum, which will be confirmed & accelerated once a closing below the 238 levels is attained with higher volumes. We advocate a sell / short sell on advances.

Your call of action - 

• Investors / cash segment players - delivery based investors are advised to stay away from the scrip and sell the existing holdings, especially if the price violates the 238 supports.

• Aggressive F&O traders - sell the June futures ( currently quoting at Rs 5 discount to cash ) if the scrip falls below the 239 levels with volumes exceeding 20 lakh shares, and maintain a Rs 5 stop loss. Expect to book profits at the 232 - 233 levels in the near term, in a conducive market. Alternately, sell the June 270 calls at a suggested premium of Rs 1.50 and above

• Derivatives contract size - Market lot = 1,500 shares. F&O margins = approx Rs 78,000 ( margins subject to change daily ).

Bank of Baroda - the banking sector was the biggest loser on Friday as the selling was polarised around this sector. Interest rate hike rumours, downgrading by broking firms, higher rural credit disbursals are some of the negative triggers for this sector. This scrip has seen a sharp fall and is well below it's 200 day SMA and also violated the support provided by a symmetrical triangle. The outlook is bearish and we advocate selling the counter short on advances as the immediate outlook shows an oversold level. 

Your call of action - 

• Investors / cash segment players - delivery based investors may avoid the counter at present levels and exit existing long positions, if any, above the 170 - 175 levels.

• Aggressive F&O traders - Sell the June futures above the 165 levels and maintain a stop loss at Rs 174 levels. We expect to book profits at the 150 mark in the near term in a conducive market. Alternately, sell the June 180 calls at a suggested premium of Rs 1.50

• Derivatives contract size - Market lot = 1,400 shares, F&O margins = approx Rs 1,10,000 ( subject to change daily ).

Bank of India - another banking counter with it's immediate outlook being bearish, the reasons being the same as BoB. The scrip is trading well below its averages and the momentum oscillators are pointing towards a weakness in the outlook for the scrip. The advance trend determination oscillator is showing a build up of negative momentum and that will see sharper falls in the near term. We advocate a sell / short sell on this counter.

Your call of action - 

• Investors / cash segment players - Delivery based investors may please avoid fresh investments at this juncture, and exit present holdings, if any.

• Aggressive F&O traders - Sell the July futures on advances to 53 levels and hold with a stop loss at the 56 levels. Expect to book profits at the 45 levels in the near / medium term in a conducive market. Alternately, sell the June 60 calls at a suggested premium of Rs 0.60 

• Derivatives contract size - Market lot = 3,800 shares, F&O margin = Rs 70,000 ( subject to change daily)

Guj Amb Cements - this cement major is showing lower tops and bottoms formation ( similar to ACC ) and is gathering downward momentum. The scrip is trading at it's threshold level of the 200 day SMA and any sustained closing below this average, and the fall will be accelerated. We recommend a sell on this counter on major advances.

Your call of action - 

• Investors / cash segment players - we advocate delivery based investors should avoid this counter for now. Existing holdings if any, should be liquidated on all advances upto the 300 levels.

• Aggressive F&O traders - Sell the July futures at / above the 285 levels and hold with a stop loss at the 293 levels. Expect the scrip to fall rapidly once the 282 levels are violated, and book profits at the 272 levels. Alternately, sell the June 300 calls at a suggested premium of Rs 2.50

• Derivatives contract size - Market lot = 1,100 shares, F&O margins = approx Rs 65,000 ( subject to change daily ).

Grasim - this cement major was recommended as a buy on many an occasion and has been a market out-performer in the past. However, of late, this counter has been under the bear hammer and is making similar patterns like ACC and GACL mentioned above. The 200 day SMA is the last threshold and should that be violated, we expect the counter to fall with accelerated momentum. The momentum oscillators are pointing towards a negative bias and all significant advances are short sell opportunities only.

Your call of action - 

• Investors / cash segment players - Avoid this counter for fresh investments and liquidate your existing holdings if any, near the 1030 - 1050 levels.

• Aggressive F&O traders -  sell the July futures on advances to the 1025 levels and hold with a stop loss at the 1050 levels. Expect to take profits at the 985 levels in the near term. In a weak market, even lower levels are possible. Alternately, sell the June 1080 calls at a suggested premium of Rs 15

• Derivatives contract size - Market lot = 350 shares, F&O margins = approx Rs 80,000 ( subject to change daily ).

Hind Lever - This scrip has been recommended by us a bearish opportunity on multiple occasions and has lived up to our expectations many times over. The directional movement index oscillators points towards a bearish tempo and the counter being a market under-performer in the near to medium term. We advocate short sales for the savvy trader on all advances.

Your call of action - 

• Investors / cash segment players - Avoid fresh commitments on this counter and exit existing holdings if any, on advances upto the 140 - 145 mark.

• Aggressive F&O traders - sell the July futures on advances to Rs 133 - 134 levels and hold with a stop loss at the 138 mark. Expect to book profits at the 124 mark in the near term. Alternately sell the June 140 calls at a suggested premium of Rs 0.75 and above.

• Derivatives contract size - Market lot = 2,000 shares, F&O margins = approx Rs 56,000 ( subject to change daily ).

SBI - This PSU banking major is showing extreme weakness and is likely to see accelerated selling pressure on all advances. The chart shows a crude bullish triangle made by the 200 day SMA acting as a hypotenuse. Once violated, the triangle has been a bearish signal for selling short. Also noteworthy is the lower tops and bottoms formation being made on the daily charts. The banking sector itself is under-performing the markets and this counter is likely to move in tandem with Andhra Bank, BoI and BoB mentioned above. We recommend selling on all major advances.

Your call of action - 

• Investors / cash segment players - avoid fresh purchases on the counter and liquidate existing holdings at the 485 - 500 levels if the market rallies.

• Aggressive F&O traders - sell the July futures ( quoting at Rs 10 discount to cash ) on advances to the 470 - 475 levels and hold with a stop-loss at the 485 levels. Expect to book profits at the 455 - 460 levels in the near term, in a conducive market. Alternately, sell the June 500 calls at a suggested premium of Rs 5

• Derivatives contract size - Market lot = 500 shares, F&O margins = approx Rs 70,000 ( subject to change daily ).

Telco - this automobile major was recommended as a short sell a fortnight ago in our special report and has been a highly profitable trade. The scrip is in a bearish spiral and is exhibiting the lower tops and bottoms formation as the chart indicates. The current levels are below the 200 day SMA and the scrip derives resistance at the 30 day SMA which is at the 420 levels. We advocate selling on major advances for the savvy traders.

Your call of action - 

• Investors / cash segment players - avoid bottom fishing at all costs and exit the existing long positions if any, at the 415 - 420 levels.

• Aggressive F&O traders - sell the July futures short on advances to the 405 levels and maintain a stop loss of Rs 10. Expect to book profits at the 380 - 385 levels in a conducive market in the near term. Alternately, sell the June 440 calls at a suggested premium of Rs 2.50

• Derivatives contract size - Market lot = 825 shares, F&O margins = approx Rs 91,000 ( subject to change daily ).

Tisco - This scrip has been another highly profitable recommendation from us on the short sale side and is moving in a bearish channel as the graphic below suggests. The intermediate trend is down and the momentum oscillators are pointing towards a fall in the near term as the scrip faces heavy selling pressure near the short term moving averages. The counter is making lower tops and bottoms and will see an accelerated fall once the 284 levels are violated.

Your call of action - 

• Investors / cash segment players - avoid the counter for fresh investments at this juncture.

• Aggressive F&O traders -  Short sell the July futures on advances to the 295 - 297 levels and maintain a stop loss at Rs 305 levels. Expect to book profits at the 285 levels, where atleast 50 % of the positions should be liquidated. Once the 284 levels are broken, we expect a bigger fall, wherein the 275 mark is likely. All profits must be booked therein. Alternately, sell the June 330 calls at a premium of Rs 1.25 or above.

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

BSE Sensex - the index is in a bearish channel and is also exhibiting lower tops and bottoms formations which is suggestive of intermediate weakness in the undertone. The momentum oscillators are pointing towards a build-up of bearish pressure and the 5000 levels are proving to be a near term resistance. On the lower side, we expect support at the 4725 levels which is the channel bottom. The outlook is weak and we advocate exit on all major advances.

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

Nifty 50 - the Nifty is making similar patterns to the Sensex and is in a negative spiral. The 1560 is the immediate top which seems un-surmountable and is an exit point for the bulls in the near term. The index is making classic lower tops and bottoms formations and the oscillators are indicating further weakness in the near term. We expect the previous immediate support at the 1485 levels to be violated and the index to take support at the 1456 levels in the near term. Should this level too be violated, expect the 1397 levels in the coming weeks.

Your  call of  action - We advocate fresh trades on the Nifty on the short side only and selling July futures ( quoting at Rs 28 discount to cash ) at the 1485 - 1490 levels and maintaining a stop loss at the 1510 levels. Expect to book profits at the 1466 levels in the near term, in a conducive market. Alternately, sell the June 1560 calls at a suggested premium of Rs 15.

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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