The Professional Ticker Reader ®

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Flavours of the week                                                            June 18, 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.

Bajaj Auto - this scrip was recommended in the recent months and has performed as per expectations, thereby rewarding bulls adequately. Technical traders may note the rising tops and bottoms formation and the movement along a long term bullish trendline that spans over 2 years. The scrip enjoys a higher than average relative strength as the RSC vis-a-vis the Nifty is at 109 ( where 100 = base ). The oscillators are pointing towards a healthy outlook and we recommend a buy for the discerning and patient investor / trader.

Your call of action -

• Investors / cash segment players - start buying on minor declines to the 1230 levels and leave room for averaging till the 1160 mark. Maintain a stop-loss at the 1125 levels and expect to book profits at the 1460 - 1500 levels in the medium to long term in a conducive market scenario.

• Aggressive F&O traders - Buy the July futures at lower levels of 1205 and hold with a stop loss at the 1168 levels. Expect to book profits in a few months time frame at the 1360 - 1380 levels in a conducive market scenario. A few rollovers maybe required in the interim. Options players do not have much of choice available as the counter is illiquid.

• Derivatives contract size - Market lot = 200 shares. F&O margin = approx Rs 40,000 (subject to change daily )

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

BPCL - this petroleum refining and marketing major is under pressure as the chart pattern is suggesting a lower tops and bottoms formation. The main bearish trigger is the rising international crude price ( covered in our special crude report elsewhere ) and the double whammy of static prices in the domestic markets due to political compulsions. The squeeze on earnings is likely to keep these stocks subdued even in firm markets and we feel maintaining short positions on this counter will be an effective hedge against long positions and profitable in a stand alone scenario as well. The oscillators are confirming a bearish outlook.

Your call of action -

• Investors / cash segment players - nil.

• Aggressive F&O traders - Short the June futures ( quoting at Rs 2 premium to cash ) at the 374 levels and maintain a stop loss at the 380 mark. Expect the fall to accelerate once the price falls below the 363 / 360 supports. Profit taking is advised at the 352 - 355 levels in the short / medium term in a conducive market scenario. Options players do not have much of choice available as the counter is illiquid.

• Derivatives contract size - Market lot = 550 shares. F&O margin = approx Rs 32,000 (subject to change daily )

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Infosys - this IT major is showing signs of bucking the weak trend and is currently poised at the threshold level of 2300 mark. The level assumes significance not only because of the psychological aspect of a round figure being tested but also because it is a significant previous top. While the oscillators are pointing towards a bullish bias, a breakout above the double top resistance of the 2300 levels with high volumes is required to confirm the bullishness. Traded volumes are showing signs of improvement and we recommend a trading buy above the 2300 mark.

Your call of action -

• Investors / cash segment players - buy above the 2300 levels on a conclusive closing basis and hold with a stop loss at the 2250 levels. Expect to book profits at the 2460 levels in a conducive market scenario in the short / medium term.

• Aggressive F&O traders - Buy the July futures ( quoting at Rs 7 discount to cash ) above the 2294 levels with an increase in traded volumes in the cash segment past the 10 lac mark on the NSE. Hold with a stop loss at the 2262 levels and a target objective of 2384 - 2400 in the short / medium term in a conducive market scenario.  Options players do not have much of choice available as the counter is illiquid in the July series. Income conscious players may sell the June 2190 puts at a suggested premium of Rs 18 or above in small lots.

• Derivatives contract size - Market lot = 100 shares. F&O margin = approx Rs 36,000 (subject to change daily )

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

ITC - this scrip has been a prolific investment recommendation and has rewarded buyers with above average appreciation in the last 4 months. Technical buffs may note the bullish chart pattern as can be seen from the higher tops and bottoms formation along the rising red trend-line. The recent bonus announcement has been somewhat below general expectations and we expect a marginal slide in the price pattern on unwinding from highly leveraged quarters. The technical supports are at the 1500 / 1435 & finally at the 1393 levels. We feel the patient trader / investor still has a major profit opportunity as buying on declines ( in a pyramid formation ) will yield superlative returns. As far as possible, buy the farthest series contracts available as they are deeply discounted to adjust for the loss of dividend which must inevitably afflict the f&o players.

Your call of action -

• Investors / cash segment players - Start buying from the 1500 levels and average lower in pyramid formation till the 1435 mark. Maintain a stop loss at the 1380 levels and expect to book profits at the 1780 + levels in the medium / long term ( or Rs 118 - 120 after the 10 : 1 split and 1 : 2 bonus ).

• Aggressive F&O traders - Buy the July futures ( quoting at Rs 28 discount to cash ) at the 1490 mark onwards and average at the 1460 levels in pyramid formation. If the August series get liquid by then, average finally at the 1435 in that series and hold with a stop loss at the 1400 mark. We expect profit taking at the 118 - 122 levels post split. Options players do not have much of choice available as the counter is illiquid.

• Derivatives contract size - Market lot = 150 shares. F&O margin = approx Rs 37,000 (subject to change daily )

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Raymond - this textile major has been recommended by us since it was quoted below the 300 mark and has performed well. The chart pattern is suggestive of a bullish outlook on the scrip for the patient players and we feel the recent news flow of the Italian tie-up is a positive development for the company. The 365 levels are proving to be a short / medium term hurdle and a multiple top on the charts. The oscillators are pointing towards an optimistic undertone and we recommend a by for the patient delivery based investor.

Your call of action -

• Investors / cash segment players - buy at current levels and average lower in a pyramid pattern to the 315 levels and maintain a stop loss at the 295 mark. Expect to book profits at the 460 - 475 levels in a years time frame.

• Aggressive F&O traders - f&o n/a.

• Derivatives contract size - f&o n/a.

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Tata Motors - this scrip was recommended as a short sale last week and has performed as per our expectations. It maybe noted the firm crude oil prices are likely to dampen this scrip's prospects. The short term bullish channel has now been confirmed as a flag formation which enables us to forecast a target price of 392 - 396 in case of a weak market outlook. The oscillators are confirming the weakness and we recommend a short sale on this counter.

Your call of action -

• Investors / cash segment players - n/a.

• Aggressive F&O traders - short sell the July futures ( quoting at Rs 8 discount to cash ) at higher levels of 415 levels and hold with a stop loss at the 424 mark. We expect partial profit taking at the 402 - 404 levels and total closure of shorts at the 395 - 398 levels. Income conscious players may sell the June 440 calls at a suggested premium of Rs 2.50 and above.

• Derivatives contract size - Market lot = 825 shares. F&O margin = approx Rs 55,000 (subject to change daily )

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

BSE Sensex - this index is within kissing distance of the previous top and a historic high of 6954 levels. Should the outlook hold, the psychological 7000 mark may be breached too. However, we would add a caveat that the upsides are likely to meet with selling pressure and higher volatility is likely to ensue. The 6800 levels are likely to be a support to watch out for in the coming week. In case the Sensex trades consistently below this level, expect a weaker outlook in the absolute short term.

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

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors 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 - the Nifty has been moving within a V shaped formation marked by 2 channels and is encountering resistance at the 2137 levels. Unless the spot trades consistently above this level, expect the pressure to continue. A support base is building up at the 2108 / 2098 levels in the short term. The oscillators are pointing towards a sideways outlook, which can change only after the Nifty starts to trade consistently above the 2137 levels. Till then we advocate a cautious approach with long positions being held with tight stop losses.

Your call of action - Remain long but do not add fresh aggressive long trades till a confirmed breakout occurs. While we do not foresee a major crash for now, caution is advocated. Income conscious players may sell the June 2020 puts at a suggested premium of Rs 7 or higher.

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors 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 has been a market out-performer as the weekly chart shows. However, expect resistance to hit the index at the 3005 levels and the outlook improves only after the index clears this hurdle on a consistent closing basis. The outlook is undecided till the closing is confirming the breakout and the oscillator is out of the lower tops groove. Till then, stay away.

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

Bajaj Auto I BPCL I Infosys I ITC I Raymond I Tata Motors 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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