The Professional Ticker Reader

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.

Arvind Mills - this textile major was advocated as hitting a resistance zone at 140 - 141 which is a formidable wave count resistance. The 101 - 105 region is a support as per retracement studies. The retracement pattern given below shows a reasonably good support at the 100 mark which was a significant high point of Nov ' 04 and significant low of January ' 05. As long as this level holds, patient traders and medium / long term investors can attempt bottom fishing in small lots.

Andhra Bank - this scrip was advocated as a weak component of the banking pack ever since it fell below the 112 levels. That support broken, the scrip has nosedived a further 9 % and tested it's 50 % retracement levels. We feel a 102 support is an important benchmark to watch out for. Should this level hold, expect a possible rally to the 110 - 112 levels where long positions can be pared and shorts positions initiated. This is a trade recommendation for the high risk aggressive players only.

Bharat Elect - this scrip has been declining steadily with the markets and is now on the threshold of a support offered by the upper trendline of an ascending triangle. It maybe noted that the scrip is near it's lifetime highs and therefore likely to see extreme volatility due to selling pressure from skeptical investors. There is a ready support at the 640 levels and should that be violated, expect excellent support from the dashed trendline at the 610 levels in a worst case scenario. Watch the price / volume action for signs of trend determination and initiate long buying at lower levels.

HDFC - this scrip has been under pressure ever since it violated the 715 levels and closed below this threshold level . The retracement pattern suggests support at the 675 - 680 levels and the crucial support being at the 650 levels. It maybe noted that almost all index frontline counters are currently trading in their oversold territories and this scrip is no exception. Note how the stochastics indicator is in the oversold region and the 200 day SMA is placed at the 673 levels ( not shown in the chart ). We recommend a buy for the patient and disciplined investor with a medium term perspective.

HDFC Bank - this private banking major has been falling in sympathy with the PSU segment and is now trading near the 38 % retracement levels. A level of 490 would be a good entry point for patient players and this level corresponds with the 50 % retracement and an important wave count support where the probability of profits are significantly higher. We recommend a buy for the savvy investor / trader. The oversold reading on the oscillators maybe noted which indicates a limited downside in the short term.

Hind Lever - this scrip was advocated as a short sell candidate ever since it violated the red trendline which marks a head & shoulder pattern. The critical threshold level is the 142 levels which is the neckline and the trend determinator for this counter. We expect a routine pullback upwards to this level after a steep fall witnessed recently. Should the scrip be unable to surpass the 142 levels with higher volumes, it's a signal for bears to go short. Technical traders may also note the bearish channel that the scrip is trading within. The lower tops and bottoms formation is a sign of weakness and the current bounce above the 200 day SMA ( not shown in the graphic ) is not confidence inspiring.

Hind Petro - another scrip with a bearish implication due to a confirmed head and shoulder formation and price / volume action confirming the weakness. The volumes are marked with a 10 day SMA and currently, the scrip is trending lower with higher volumes. There are indications of a distribution in progress and we feel upsides are likely to be met with selling pressure. We feel the head and shoulder formation is pointing towards a 10 - 15 % fall on the counter over the next 2 - 3 quarters in case the oil prices remain firm and all other factors remaining constant. We advocate short selling on advances.

ITC - this FMCG major was recommended by us as a market out-performer and has lived up to our expectations. The upward sloping trendline is providing a reliable support and the higher tops formation is confidence inspiring. To complete a bullish picture, a breakout above the 1400 levels will propel this stock into a new bull orbit with zero resistance on the upsides. Short term traders may note the 1275 levels as being threshold levels for short term sentiments. The 1250 levels lower down offer more serious support for the medium / long term investors. The momentum oscillator is pointing towards an upmove and we feel the rally past 1350 with volumes exceeding 4,00,000 will be an excellent buy indicator for bulls.

Reliance Inds - this scrip was recommended by us as a strong buy ever since it surpassed the 542 levels with a surge in volumes. That completed an inverted head and shoulder formation and the volumes which rose past the 10 day average confirmed that pattern. The first target price of 600 was comfortably achieved and the scrip is in a consolidation mode as a retracement has been seen. As long as the neckline is not violated, expect the scrip to remain buoyant. The momentum oscillator points towards a slight upmove and we recommend a buy.

SBI - this PSU banking major has had the dubious distinction of being one of the biggest losers in the previous week and shedding significant open interest as the bulls are baling out in panic. The retracement pattern study indicates a minor / short term support at the 655 levels and a more meaningful support at the 635 levels. The traded volume seem to indicate a sell climax and that the scrip maybe nearing an immediate bottom for now. We recommend a buy for the short term players with a reasonably higher risk appetite.

Tata Motors - this scrip has been one of our prolific recommendations for short sales and has rewarded the bears handsomely. After a head and shoulder pattern was confirmed as the 460 levels were violated, we advocated a target of 415 - 422 which was achieved easily. Since the scrip appears poised for a technical pullback, we feel short sales are recommended at higher levels for the higher risk appetite traders.

Tata Power - this scrip is exhibiting a weak chart pattern as the stock tests the 335 support for the third time in as many months. The 335 levels are a meaningful levels as the scrip has broken out in November ' 04 from this levels and the erstwhile resistance became a support on the downsides. The consolation is that the fall is accompanied by lower traded volumes and the 10 day average of the daily volumes itself is falling. In case the markets are to rebound, the counter will see a relief rally till the 360 - 365 in the near term. We recommend a speculative buy in the event of a market turnaround.

UBI - this PSU banking scrip is likely to derive support at it's 5 month trendline at the 98 levels. The oscillators are pointing towards a weak bias and not yet conclusively negative. A bounceback from the 98 levels or a conclusive fall below it will determine the trend in the immediate future.

BSE Sensex - The sensex is showing signs of weakness after closing below the 6518 levels and is likely to seek support at the 6250 - 6300 levels in the coming week. An upside of 6620 is the most optimistic target on the upside in the coming week if any reversal occurs. Upsides are likely to be met with selling pressure and we feel the index is likely to remain under pressure in the coming week.

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

Nifty 50 - The Nifty as we have been advocating, has minor support at the 2004 / 2005 levels and any sustained closing below this level with higher volumes will spell further weakness for the benchmark. Incase of a conclusive violation, expect support at the 1970 - 1960 levels in the coming week. The markets are likely to commence the process of price discovery and is likely to remain in that mode for a few weeks. Upsides will see resistance at the 2040 - 2065 in the coming week. Expect nervous unloading to continue in the coming days.

Your call of action - If the cash does not violate the 2004 levels, buy the April futures and await a pullback on account of short covering due to end of account considerations. Profit target of 2035 / 2040 will be a reasonable target and a stop loss be maintained on all long positions at the 1988 levels in spot. Alternately, if the Nifty falls conclusively below the 1998 levels and stays below, short sell the April futures and hold with a stop loss at the 2016 levels. Expect profit taking at the 1975 in the short term in a conducive market. Income conscious players may sell the April 2200 calls at a suggested premium of Rs. 10

CNX IT - This IT index has been unable to surpass the 3000 levels convincingly and is showing a negative divergence on the charts. A fall below the 2760 levels will see a prolonged weakness and and fall to the 2635 is not ruled out.

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

Dow Jones Industrial Average - The Dow has plunged yet again and is testing crucial short / medium term averages. Traders may watch the 10350 levels keenly for signs of trend determination and any fall below will lead to an accelerated fall. Upsides are restricted to the 10,665.

Your call of action - this is a pure academic study.

Arvind Mills I Andhra Bank I BEL I HDFC I HDFC Bank I Hind Lever I HPCL I ITC I Reliance I SBI I Telco I Tata Power I UBI I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Top I Close window I Print page

Nasdaq - This technology / biotech index is exhibiting similar chart patterns like the Dow and is critically poised at it's 52 week SMA. Upside resistance at the 2055 levels and support at the 1978 need to be watched carefully. The bias is towards a fall.

Your call of action - this is a pure academic study.

FTSE - This index though stronger than the US benchmarks in relative terms, is also exhibiting weakness. A fall to the 4765 levels is not ruled out and a close above the 5065 is a trigger for the bulls to watch out for, in the absolute short term.

Your call of action - this is a pure academic study.

Trading tips for the week

The put / call ratio is falling and is currently at the 0.32 : 1 levels and the outstanding positions in the derivatives segment have shown a fall. That is a routine phenomena ahead of expiry. The FII investments are continuing to remain negative / slowing to a trickle.
There is offloading at higher levels in stock futures. That indicates a cautious approach as long positions in individual stocks is being hedged by Nifty shorts.
The current week is crucial for the markets as the year end and f&o expiry are converging on the market players.
The impeding expiry of the March series will see higher volatility in the coming week.
Trades must be executed in small volumes due to the higher volatility expected. Trade fewer counters and conserve cash for future opportunities.
Standby for fresh recommendations via SMS on a real - time basis.

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.