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.

Bank of Baroda - The scrip is in a downward sloping channel and has shown resilience in the last 6 sessions. The recent bottom made is higher than the previous one and the oscillators are showing signs of a short term recovery. The improved sentiments for the sector is a positive for this counter. Since the scrip is moving above the averages, the probability of surpassing the previous high is fair. We recommend a buy.

BSES - This Reliance group company has taken support at the 13 & 30 day SMA's which is a meaningful chart pattern. The intermediate trend still remains bullish and a bounce up in the markets will see the scrip scaling new highs. As long as it makes higher bottoms and tops, the scrip has the potential to scale upto 780 levels in the coming week. We recommend a short term buy.

Corporation Bank - This banking major is a mid-cap story which has been a persistent market out-performer. We recommend this counter for the delivery based investor with a time frame of atleast a quarter. The most noteworthy aspect of the chart is the support that this counter receives at the short & medium term averages. The current support is at the 240 levels and that will be an effective stop loss for all purchases.

HCL Tech - This technology large cap counter is moving in a downward sloping channel and the channel bottom has coincided with the 200 day SMA at the 230 levels. The upsides will see selling at the channel top at the 280 levels. This channel being 3 months old, has a significant trend determining value for the stock in the near term. Should the channel top be surpassed, expect the scrip to see higher levels of 290 - 295 during the week.

HPCL - this scrip is in an upward sloping channel and has moved above it's short term averages, which is a positive indicator. The increase in crude prices globally will ensure that the prices in the domestic markets will be revised upwards after the elections. That will improve the cash flows for the refinery companies which operate on a fixed margin on a cost plus basis. Do not stay long if the channel bottom is violated in a downward direction with higher volumes.

ICICI Bank - this scrip was recommended last week for investors and traders alike at the 260 - 265 levels and the same has been a profitable proposition. The announcement of the IPO price has been a trigger for this counter and the secondary market price is unlikely to swing significantly in either direction. That makes this scrip a good fixed income play. Note how the head and shoulder pattern has been completed as advocated last week and the price target on the downside has been achieved.

Infosys - This software major is showing signs of revival as the downward sloping channel has been violated on the upsides. The rally has been accompanied by a turnaround in the oscillators and the outlook seems to point towards to a rise till the earnings are announced. Infosys has invariably seen a pre-result run up and a fall thereafter. Our overall outlook for the sector remains unchanged as the weakening US $ and margin pressures are continuing worries. The upward target maybe revised to the 5500 - 5550 levels before the results, where selling can be initiated. Another trigger for the upmove is the general opinion of the US corporate sector that unemployment fears due to out-sourcing from India are exaggerated. If the US market rally slumps, the stock may fall before achieving the 5550 levels.

L&T - this engineering major is in an uptrend as the chart shows a support at the upward sloping trendline. The price line is above the short term moving averages and gets resistance at the 600 levels. The oscillators are showing an upward build up of momentum and a confirmatory rally above the 600 levels will take the scrip in a new zone above which the stock will face little / no resistance. We recommend a buy.

Nalco - This aluminium major is showing signs of consolidation and a trend determination breakout will be seen once the 193 levels are surpassed. The stock is moving in a narrow and compressed trading pattern and a breakout / breakdown is likely in the near term. Buy only only above a confirmatory breakout above the 193 levels.

Satyam Computers - The counter has seen two violations of the hypotenuse of the triangle formation and then a breakout in the upward direction. The two occasions that the scrip broke below the hypotenuse, caused whipsaws and trades were stopped out at losses. Our outlook on the software sector has been specified above in the Infosys space and the oscillators are pointing towards an upmove. That makes the immediate outlook as mildly positive with a fall near / after the earnings announcement. Our outlook is that of sales at higher levels. The upsides may see the scrip hit the 334 levels and all sales maybe hedged with options.

SBI - this counter is showing relative strength as the banking sector is witnessing heavy build up of buy positions. The scrip is moving in a downward sloping channel and is likely to test the channel top before selling pressure can ensue. We recommend a buy for a higher risk trader.

Tata Power - this counter was recommended a few weeks ago as making a flag formation which turned out to be a false breakout as the market sentiments weakened. The fact that the scrip has made a higher bottom shows the strength in the counter. A close above the channel top and the moving averages at the 375 levels for 1-2 days will put the scrip on the bullish path again. We recommend a buy on advances in a rising market.

BSE Sensex - The Sensex is moving in a downward sloping channel like the Nifty. Since the index has moved above the 13 day SMA, we expect the index to hit the 5650 levels in a firm market. Expect support on the lower levels at the 5450 in the near term.

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 get support at the 1660 levels which has turned out to be justified. The upsides may see the 1778 - 1800 levels on the index in the coming week before serious profit taking maybe seen. The oscillators are showing a selling pressure since 3 months and a corrective rally now. The trend has not reversed completely though. We feel selling short at significant advances at 1800 or above in small lots is a good option for the higher risk profile trader.

Your call of action - We advocate fresh trades on the Nifty on the short side only on major advances that too in small / minimal lots only. Sell the April futures at or above 1800 levels, maintaining a stop loss at the 1825 levels and expect to book profits at the 1760 - 1765 levels in a conducive market. Options players can sell the April 1940 calls at a suggested premium of Rs 7 - 8 ( possible on major advances ).

Dow Jones Industrial Average - This old economy benchmark index measures the outlook on the New York stock exchange. Last week we had advocated support at the 10,000 levels ( click here to view our previous editions ) which proved a major support for the markets. The Dow Jones has rallied from the 10,008 mark !!! The index is likely to remain under pressure till it surpasses the 10,500 levels with heavy volumes. Expect the 10,000 levels to be a good short term base for this index in the near term.

Dow Jones Industrial Average - 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. The 1850 levels would remain a good base for this index - which if violated, will take the Nasdaq to 1815 levels. Only above a 2050 close, expect the next resistance at the 2120 levels. The outlook remains that of weakness on advances.

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 weakness ( click here to view our previous editions ). Our is outlook is that of weakness for this index. The oscillators are pointing towards a downward market at present levels - only above a conclusive close above 4500 levels, will a new short term 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 climbing and is currently at the 0.42 : 1 levels and the outstanding positions in the derivatives segment have shown a short selling interest on advances. The rally is still a corrective one and can terminate abruptly if traded volumes, market breadth and outstanding positions do not improve substantially.
The FII investments are continuing steadily. A part of the institutional buying can be attributed to the end of the quarter / year NAV management. The institutional activity needs to be monitored after April beginning.
The turmoil in the Taiwanese markets will see a diversion of resources from the emerging market investors from the Taiwanese markets to other markets - including India.
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 build-up of positions in the F&O segment needs to be monitored closely.
The current week is crucial for the markets as the year is ending, ONGC will be listed shortly and earnings season will be flagged off in the near future. The trend in the market direction will start emerging here onwards.
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.

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.