Trading recommendations - July 24, 2005

Ashok Leyland - This scrip was recommended vide our previous editions dtd June 05 & 11, July 02 and 09, 2005. Click here to view the previous recommendations. This scrip was recommended on the basis of a confirmed breakout out of a bearish pattern. As the name suggests, breakout patterns are powerful and relatively safe trading opportunities. The same has been achieved with high volumes and a steep ramp up in the open interest. All of which suggest a build-up in upward momentum. The oscillators are confirming the upmove and the stock may test the previous significant high above 30 levels in the medium term. We remain bullish on the counter and advocate a hold on existing long positions and a buy on declines. Our investors may start booking profits on Dabur Ind ( recommended here last week ) as the scrip has met target levels.

Your call of action -

• Investors / cash segment players - hold existing long positions and add on declines to the 25 - 26 levels in case of a fall in the markets. A stop loss at the 23.50 is advised and a projected profit taking target is the 30 level in a few months.

• Aggressive F&O traders - Buy the August futures ( quoting at Rs 0.50 premium to cash ) on declines to the 26.50 levels and hold with a stop loss at the 24.50 levels. Expect to book profits at the 29.50 - 30.50 levels in the medium term. Due to the size of the market lot, we advocate taking a small / medium sized exposure on this counter.

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

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