Trading recommendations - May 15, 2005

Bajaj Auto - this 2 wheeler major was recommended last week and has shown decent appreciation. As we advocated last week, the scrip has managed to close above the 1125 levels convincingly and entered a lower resistance area. The oscillators have signalled a build-up of upward momentum and the simple moving averages ( SMA's) are in a bullish mode. Technical traders may note the higher relative strength vis-a-vis the Nifty. We recommend a buy for the patient long term investors / traders.

Your call of action -

• Investors / cash segment players - buy at the current levels and keep room for averaging till the 1060 levels and hold with a stop loss at the 1020 mark. Expect 1250 + in the medium term. Over the long term, expect higher levels.

• Aggressive F&O traders - Buy the June futures at the 1115 levels ( quoting at Rs 22 discount to cash ) and hold with a stop loss at the 1055 levels. Expect to book profits at the 1200 - 1220 in a few months time frame. Options players do not a choice due to liquidity problems.

• Derivatives contract size - Market lot = 200 shares. F&O margin = approx Rs 36,000 (subject to change daily )

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