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.

Bharat Electronics - This scrip is in a major uptrend as the weekly chart shows. Being a strong market out-performer with a relative strength of over 300 ( 100 is the base ), this scrip is a good bet in a bullish market. The traded volumes are relatively lower and a breakout above the recent top is needed before a buy can be recommended.

Dr Reddy - This pharma major is showing signs of a classic rounding bottoms formation on the weekly charts as the scrip attempts to recover after a steep crash. The oscillators are displaying a strength in the undertone and moving in tandem with the price graph. The traded volumes are rising slightly ( not shown in the graph ) and the scrip is trading above the short & medium term averages. That is a positive indicator. As long as the scrip stays above the 750 mark, expect the undertone to remain positive. We recommend a buy for the patient investor.

GAIL - This gas major has signalled a breakout above the medium term congestion levels and closed above the 52 week average in the bargain. The oscillators are supporting the rally and signal strength in the undertone. We recommend a trading buy for the higher risk traders.

Glaxo - This MNC pharma major has been recommended by us a buy on all major declines and we re-affirm our faith in the counter. The oscillators are moving in tandem with the price graph and the outlook remains positive. Buy on declines in a reacting market.

HDFC Bank - this private sector bank was recommended by us as a buy in the recent past and the price trigger was above 420 levels which has been initiated. The scrip currently trades at near life time highs and is a strong market performer. Our view is that the PSU sector banks will slowly but surely lose ground to the private sector banks and this bank is well poised to exploit the shift in focus. Technically too, the scrip has signalled a breakout after a closing above the 422 levels has been achieved. We recommend a buy for the discerning / patient investor.

Infosys - This technology bell weather has been recommended by us a buy candidate ever since it announced it's June 04 numbers. The scrip has exhibited a classic flag formation with heavy volumes and support from the oscillators. The flag formation is a measuring move - the consolidatory fall is almost invariably the mid-point of the chart formation. Back of the envelope calculation - starting point of the rally = 640, peak = 1520. Upmove 880 points. The flag formation followed and a breakout was achieved at 1435 ( where we recommended a buy ). Target price is 1435 + 880 points = 2315 in a text book scenario. We recommend a buy on all significant declines.

Ranbaxy - This pharma major is one of our top picks and the recent buy reco on Glaxo also applies to Ranbaxy with the same EMR logic. The chart pattern suggests a flag formation ( refer to Infosys explanation of flags ). The upward target is a modest 1250 in the short / medium term. The scrip is a strong market out-performer and has a very high relative strength. We recommend a buy on all major declines.

Tisco - This steel major holds the distinction of having the highest open interest in the futures segment since months and moves the market sentiments with itself. The scrip is currently below it's threshold level of 309 where resistance from previous highs is likely to be felt. A breakout above the 309 will be a bullish trigger for traders / investors to buy afresh.

BSE Sensex - The Sensex is on the threshold of a breakout above the channel top which will take it to a lower resistance area in the short term. Once the 5945 levels are surpassed, expect next resistance at the 6000 mark in the coming week. Support at the downsides exists at the 5800 levels in the near term.

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

Nifty 50 - The Nifty is exhibiting similar chart patterns to the Sensex and is on the verge of a breakout above the channel top at the 1866 levels. A breakout above this level will see the 1880 - 1885 levels in the coming week. Should the external factors and news flow remain positive, levels above 1900 maybe seen. The outlook remains positive and support on the lower side will be seen at the 1820 levels in the week ahead.

Your call of action - Buy the November futures and hold with a stop loss at the 1838 levels. Expect profit taking at the 1875 - 1882 levels in the week ahead. Options players may buy the Novermber 1860 calls at Rs 22. Income players can buy the Nov 1750 puts at Rs 5.

CNX IT - this technology index was advocated last week as nearing a support level near the medium term moving averages, which it has not violated yet. The index is attempting a breakout above the previous highs and above this level, expect the upmove to gain momentum. We recommend a buy.

Your call of action - Since the CNX -IT futures are not very liquid, we suggest trading the Nifty 50 instead. Die hard players can buy as long as the index trades above the 2100 mark and hold with a stop loss at the 2040 levels and profit taking at the 2200 levels.

Dow Jones Industrial Average - The Dow has signalled breakout and closed above the bearish channel and the short & long term averages, which is a bullish indicator. Should the index stay above the 10225 levels, expect a bullish outlook. The upper target is 10500 in the coming week and support exists at the 10223 levels.

Dow Jones - Weekly chart

Your call of action - Since Indian investors are not allowed to trade in overseas markets, this is a pure academic study.

BEL I Dr Reddy I GAIL I Glaxo I HDFC Bank I Infosys I Ranbaxy I Tisco I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Close window I Print page

Nasdaq - The Nasdaq has also signalled a breakout like the Dow and is in a bullish formation. As long as the 1985 levels are not violated downwards, expect the bullishness to continue. The upper target is the 2110 mark.

Nasdaq - Weekly chart

Your call of action - Since Indian investors are not allowed to trade in overseas markets, this is a pure academic study.

BEL I Dr Reddy I GAIL I Glaxo I HDFC Bank I Infosys I Ranbaxy I Tisco I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Close window I Print page

FTSE - The FTSE has been stronger than the US indices and has traded above the congestion levels of the 4625 levels, where support is likely to be seen. The upsides are likely to be at the 4890 in a conducive scenario.

FTSE - Weekly chart

Your call of action - Since Indian investors are not allowed to trade in overseas markets, this is a pure academic study.

BEL I Dr Reddy I GAIL I Glaxo I HDFC Bank I Infosys I Ranbaxy I Tisco I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Close window I Print page

Trading tips for the week

The put / call ratio is climbing and is currently at the 0.33 : 1 levels and the outstanding positions in the derivatives segment have shown a qualitative increase, which is a positive indicator. The FII investments are continuing steadily.
There is buying at lower levels in stock futures. That indicates a positive approach as long positions are being added.
The index heavy-weights are showing strength again. This in turn will boost the indices and cause a feel good factor.
Trades must be executed in slightly increased volumes due to the improved outlook. Trade fewer counters and conserve cash for averaging 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.