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Flavours of the week                                                            July 30, 2005

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.

Ashok Leyland - This scrip was recommended vide our previous editions dtd June 05 & 11, July 02, 09 and 23 2005.. Click here to view the previous recommendations. The scrip has performed as per our expectations and has confirmed the underlying strength in the chart formation. Incidentally, this pincer style breakout formation is a very powerful indicator of strength and the traded volumes and momentum oscillators are confirming the upmove. The scrip is likely to encounter some resistance at it's previous top and should there be some nervousness on account of higher crude prices, there maybe a corrective pullback. Technical traders may note the rising relative strength  ( to understand the importance of relative strength, click here to learn the tutorial ) at 107 vis-a-vis the Nifty ( where 100 = base ). We recommend a buy on dips for the patient investor / traders.

Your call of action -

• Investors / cash segment players - buy on declines if any, at the 28 levels and leave room for averaging till the 25 mark. Hold with a stop loss at the 23.50 levels and expect to book profits past the 35 levels in the medium term. Long term players may expect higher levels.

• Aggressive F&O traders - buy the August futures at the 28.50 levels and hold with a stop loss at the 26.50 mark. Expect to book profits at the 32 + levels in the short / medium term. A price of 34 maybe seen after a few rollovers.

• Derivatives contract size - Market lot = 9,550 shares. F&O margin = approx Rs 43,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Aurobindo Pharma - This scrip was recommended vide our previous editions dtd July 23, 2005. Click here to view the previous recommendations. The scrip is gaining upward momentum and the traded volumes are rallying in tandem with the price. The MACD oscillator has confirmed a buy and the relative strength  ( to understand the importance of relative strength, click here to learn the tutorial ) of the scrip vis-a-vis the Nifty is high at 1251 ( where 100 = base ). A sustained trade above the 375 levels with higher will be the final confirmation of the bullishness

Your call of action - .

• Investors / cash segment players - buy above a consistent and conclusive close above the 375 levels with heavy volumes. Maintain a stop loss at the 345 levels and expect to book profits at the 425 levels in the medium term. Over a longer time frame, expect higher levels.

• Aggressive F&O traders - buy the Aug futures ( quoting at Rs 4 premium to cash ) above a consistent close over the 378 levels. Hold with a stop loss at the 364 levels and expect profit taking at the 400 + levels in the medium term.

• Derivatives contract size - Market lot = 700 shares. F&O margin = approx Rs 49,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Canara Bank - This scrip was recommended vide our previous editions dtd Jan 08, Feb 12, July 09, 16 and 23, 2005.  Click here to view the previous recommendations. Technical savvy traders may note the confirmed breakout over the channel top and also the neckline of the inverted head & shoulder pattern. The traded volumes have improved a tad and the oscillators are confirming the upmove and the relative strength ( to understand the importance of relative strength, click here to learn the tutorial ) is higher at 228 vis-a-vis the Nifty ( where 100 = base ). Cautious traders may want to wait for a second week of higher closing before initiating a trade, especially awaiting higher volumes. The inverted head and shoulder being a measuring move, the target of 290 + is likely in the medium term and 10 % higher in the long term. We re-affirm our buy on the counter.

Your call of action -

• Investors / cash segment players - Buy the scrip after a conclusive close above the 250 levels on heavier volumes. Maintain a stop loss at the 228 levels on a closing basis. That will signal a weakness below the neckline in the short term. A target of 320 + is likely in a year's time frame.

• Aggressive F&O traders - Buy the Aug futures ( quoting at Rs 3.50 discount to cash ) above a consistent close over the 250 levels and maintain a stop loss at the 238 levels. Expect to book profits at the 270 + levels in the short / medium term and 290 + in the medium / long term.

• Derivatives contract size - Market lot = 1,600 shares. F&O margin = approx Rs 59,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Corporation Bank - This scrip is another emerging banking stocks that is a strong market out-performer. Note the high relative strength  ( to understand the importance of relative strength, click here to learn the tutorial ) of 197 vis-a-vis the Nifty ( where 100 = base ). The oscillators are confirming the uptrend and the traded volumes have jumped. The breakout above the 400 levels ( double top resistance ) is a positive indicator and we recommend a buy on all major declines.

Your call of action -

• Investors / cash segment players - start buying on declines to the 460 levels and leave room for pyramid averaging till the 425 levels. Maintain a stop loss at the 390 levels and profit taking is expected at the 620 levels in 12 - 15 months.

• Aggressive F&O traders - Buy the Aug futures ( quoting at Rs 4 premium to cash ) at the 475 levels and average lower till the 450 levels. Maintain a stop loss at the 435 levels and expect to book profits at the 525 - 535 in the short / medium term.

• Derivatives contract size - Market lot = 600 shares. F&O margin = approx Rs 42,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Guj Amb Cements - this scrip was recommended vide our edition dtd. June 06, 2005. Click here to view the previous recommendations. The stock has consolidated after the split and has begun to trade higher with confirmation from the oscillators. The high relative strength ( to understand the importance of relative strength, click here to learn the tutorial )  of 129 vis-a-vis the Nifty ( where 100 = base ) is confidence inspiring. A consistent trade above the 65 levels with high volumes will be a positive trigger for the bulls to re-enter long. We recommend a buy for the patient and discipline trader / investor

Your call of action -

• Investors / cash segment players - buy at current levels and average lower in pyramid fashion till the 57 levels. Maintain a stop loss at the 54 mark and expect profit taking at the 75 in the medium term and 84 / 86 levels in a years time frame.

• Aggressive F&O traders - Buy the August futures at the current levels and keep room for averaging till the 60 levels. Maintain a stop loss at the 58 mark and a profit target of 70 - 72 in the medium term.

• Derivatives contract size - Market lot = 4,125 shares. F&O margin = approx Rs 41,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

GSK Pharma - this scrip has been recommended earlier vide our edition dtd. Jan 16 & 30, June 26, July 02, 09 and 16, 2005 the stock has rewarded bulls handsomely, though we feel the best is yet to come. Click here to view the previous recommendations. Technical traders may note how the scrip makes consistent higher tops and bottoms and oscillators are confirming the bullish trend. The high relative strength ( to understand the importance of relative strength, click here to learn the tutorial ) of 189 is confidence inspiring and rising moving averages complete the optimistic picture. We feel the higher volatility and nervousness in aggressive scrips will see an upward re-rating of relatively defensive pharma scrips and this stock is a likely beneficiary. We recommend a buy on declines only.

Your call of action -

• Investors / cash segment players - buy on declines to the 860 levels and keep room for pyramid style averaging till the 800 mark. A stop loss at the 780 ( unlikely ) level is advocated and profit taking beyond the 960 levels is advocated in the medium term. Over a long term time frame, we project a four digit level for the scrip.

• Aggressive F&O traders - Buy the August futures ( quoting at Rs 6 premium to cash ) on declines to the 865 and leave room for averaging till the 835 mark. A stop loss is advised at the 820 and  aprofit target well past the 900 levels in the medium term.

• Derivatives contract size - Market lot = 300 shares. F&O margin = approx Rs 42,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

HPCL - this petroleum refining and marketing PSU major has been recommended vide our earlier editions dtd Jan 16, Mar 13 & 26, April 03 & 10, June 25, July 02, 09 and 16, 2005 and has performed as per our bearish expectations. Click here to view the previous recommendations. Technical traders may note the lower tops and bottoms formation and drying volumes, showing trader indifference. Also note the low relative strength vis-a-vis the Nifty ( to understand the importance of relative strength, click here to learn the tutorial ) currently at the 65 reading ( where 100 = base ). This factor makes this scrip a huge under-performer and prime short sale in the event of a market fall. The oscillators are in a sell mode and higher crude prices are likely to adversely impact the outlook. The conclusive fall below the 300 threshold ( also happens to a neckline of a head & shoulder pattern ) is indicating the possibility of 260 levels in the short term and lower levels in the longer term.

Your call of action -

• Investors / cash segment players - n/a.

• Aggressive F&O traders - short the September futures ( quoting at Rs 3 premium to cash ) on a slight pullback to the 295 - 297 levels and hold with a stop loss at the 312 levels. Expect profit taking at the 260 - 265 levels in the medium term.

• Derivatives contract size - Market lot = 650 shares. F&O margin = approx Rs 31,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Punj Nat Bank - We initiate coverage of this scrip with a bullish outlook as the scrip is attempting to make a bullish pattern after a fairly long consolidation phase. The high relative strength  ( to understand the importance of relative strength, click here to learn the tutorial ) of 506 vis-a-vis the Nifty ( where 100 = base ) is confidence inspiring. The scrip is trading above the 414 congestion levels and will remain positive as long as this level is not violated downwards. The momentum oscillators are pointing towards a bullish outlook and a confirmatory consistent trade above 414 on higher volumes will be a conclusive confirmation. Buying is recommended.

Your call of action -

• Investors / cash segment players - Buy at the current levels and hold with a stop loss at the 398 mark. Expect to book profits at the 445 - 452 levels in the medium term. Longer term players may expect higher levels.

• Aggressive F&O traders - Buy the August futures ( quoting at Rs 7 premium to cash ) at the current level and average lower till the 418 levels. Hold with a stop loss at the 410 levels. Expect to book profits at the 448 - 455 levels in thge medium term.

• Derivatives contract size - Market lot = 600 shares. F&O margin = approx Rs 40,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

SBI - this PSU banking major is in a major uptrend as the chart pattern indicates. Earlier recommendations dtd Jan 07, Mar 12, April 02, May 21, June 05 & 11, July 02 and 09, 2005 have yielded superlative results. Click here to view the previous recommendations. The confidence inspiring aspect about this scrip is the rising tops and bottoms formation, the breakout above the 750 resistance and increased volumes on this up thrust. The oscillators are in agreement with the upmove and the high relative strength ( to understand the importance of relative strength, click here to learn the tutorial ) of 129 vis-a-vis the Nifty ( where 100 = base ) are bullish indicators. Veteran investors of bsplindia.com will recollect our projection of 920 levels in 12 - 15 months, which we re-affirm.

Your call of action -

• Investors / cash segment players - hold existent long positions and add on significant declines at the 770 levels with room for pyramid style averaging till the 740 mark. A stop loss at the 705 levels is advocated and profit target guidance of 920 + levels is maintained.

• Aggressive F&O traders - Buy the August futures ( quoting at Rs. 2 premium to cash ) at lower levels of 780 and average lower till the 765 mark. A stop loss at the 735 levels is advocated and a profit target of 860 is projected in the medium term.

• Derivatives contract size - Market lot = 500 shares. F&O margin = approx Rs 57,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

UTI Bank - This scrip was recommended vide our editions dtd July 02 and 09, 2005 and the stock has remained firm. Click here to view the previous recommendations. The scrip is on the threshold of a breakout above the 275 levels and the traded volumes are suggestive of higher investor activity. The oscillators are pointing towards a build up of upward momentum and a price breakout will confirm the upmove. Note the high relative strength ( to understand the importance of relative strength, click here to learn the tutorial ) of 531 vis-a-vis the Nifty ( where 100 = base ). We recommend a buy on a confirmed breakout.

Your call of action -

• Investors / cash segment players - buy on a sustained trade above the 275 levels and average till the 250 mark. Maintain a stop loss at the 235 mark and a profit taking target of 300 + levels in the medium term and higher levels in the long term.

• Aggressive F&O traders - buy the August futures ( quoting at Rs 2 premium to cash ) only after a sustained breakout above the 272 levels with higher volumes. Maintain a stop loss at the 260 mark and a profit target of 290 + in the short / medium term.

• Derivatives contract size - Market lot = 900 shares. F&O margin = approx Rs 36,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Wockhardt - This scrip was recommended vide our previous editions dtd July 23, 2005 and the scrip is making attempts to make higher tops. Click here to view the previous recommendations. The scrip is moving higher with oscillator support and a high relative strength ( to understand the importance of relative strength, click here to learn the tutorial ) of 125 vis-a-vis the Nifty where ( 100 = base ). The scrip is likely to decline in case the market witnesses a downturn and is a buy on declines.

Your call of action -

• Investors / cash segment players - buy on all declines especially near the 415 levels and leave room for averaging till the 375 levels. A stop loss is advocated near the ( unlikely ) 345 mark. A target of 520 is likely in the medium term and significantly higher levels in the long term.

• Aggressive F&O traders - Buy the August futures ( quoting at Rs. 6 premium to cash ) on declines to the 420 - 425 mark and average till the 400 levels. A stop loss at the 385 levels is suggested and a profit target of 465 - 475 is likely in the medium term.

• Derivatives contract size - Market lot = 600 shares. F&O margin = approx Rs 47,000 (subject to change daily )

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Indices - domestic

BSE Sensex - this index is moving in a higher tops and bottoms formation and exhibiting a bullish outlook. The immediate resistance is at the 7766 levels and support at the 7474 levels in the coming week. The oscillators are pointing towards a continued bullishness and barring profit taking, we do not expect a major trend reversal.

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

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Nifty 50 - this NSE benchmark was advocated as having resistance at the 2334 levels and that is where it reversed from. The index is approaching it's channel top and the 2334 - 2350 levels are likely to be a formidable short term resistance area in the coming days. Support on the downside will be seen at the 2284 / 2269 levels in the coming days. The short term momentum oscillator ( stochastics ) is pointing towards an over bought position and a corrective fall may occur.

Your call of action - start taking profits in staggered lots at current levels and book major profits by the 2245 levels.

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

CNX IT - this IT index is likely to under-perform the other bench marks and will start to show strength only above the 3000 levels. The fortnight long consolidation is likely to extend if the markets do not rally strongly in the immediate future. Watch the 2945 levels for short term support.

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

Ashok Leyland I Aurobindo Pharma I Canara Bank I Corporation Bank I Guj Amb Cements I GSK Pharma I HPCL I Punj Nat Bank I SBI I UTI Bank I Wockhardt I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

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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