Trading recommendations - July 09, 2005

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 and July 02, 2005. Click here to view the previous recommendations. This scrip should be seen in conjunction with the international / MCX prices crude prices. The higher the crude prices, the increased the downward pressure on this scrip. Technical traders will see a head and shoulder pattern emerging with a neckline at the 300 mark. The scrip is drifting lower and the volumes are sinking. Also note the falling RSC of 68 vis-a-vis the Nifty ( where 100 = base ). All these factors point towards a weak outlook on the counter. We maintain a bearish outlook on the scrip, especially below the 300 mark.

Your call of action -

• Investors / cash segment players - N/a.

• Aggressive F&O traders - Short the July futures ( Aug more advisable ) as and when the cash price falls and stays below the 300 levels with higher volumes. Maintain a stop loss at the 314 levels and expect to book profits at the 280 levels in the short / medium term. Longer term outlook for the scrip is even lower.

• Derivatives contract size - Market lot = 650 shares. F&O margin = approx Rs 32,000 (subject to change daily )

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