Trading recommendations - Jan 16, 2005

BPCL - this scrip was recommended vide our earlier editions Dtd. Dec 26, 2004 and Jan 01, 2005. Please click here to view previous reports. The scrip is news driven as the international prices of crude oil largely influence this refining majors short term directions. Technical traders will note two important aspects about this chart - the scrip has seen a 15 % fall last week & the fall has occurred from below the May 17, 2004 highs. That shows the inherent weakness on the counter in the absolute near term. Also note the ascending triangle formation on the chart and the scrip on the threshold of the 52 week SMA at the 400 levels. We feel this level is a crucial support, if violated will result in further weakness. The near term support is likely at the triangle top which coincides with the 30 week SMA at the 375 levels. High risk traders may go short on the counter upon a confirmed breakdown from the 400 levels in a bearish market.

Your call of action -

• Investors / cash segment players - n/a.

• Aggressive F&O traders - short sell the Jan futures ( Feb futures are not liquid yet ) once the price falls below the 402 levels. Maintain a stop loss at the 410 - 412 levels and expect to book profits at the 485 - 488 levels in a conducively weak market ( especially with rising crude prices ) in the short term.

• Derivatives contract size - Market lot = 550 shares. F&O margin = approx Rs 39,000 (subject to change daily )

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