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.

Allahabad Bank - This is a re-structuring story in the PSU banking sector which is also likely to get a boost from the lower inflation and stable interest rate regime. The fears dogging the banking sector are higher inflation which will erode savings and lower credit offtake due to hardening rates. Since both these fears are allayed in the short term, the sector is likely to see a relief rally. The scrip itself is showing a rising tops and bottoms formations and a historical support exists at the 30 week SMA which is currently at the 36 levels. Noteworthy aspect about this counter is the fact that this is a market out-performer ( notice the relative strength index which shows a reading of 400 or 4 times higher strength than the sensex ! ). We recommend a buy for the patient delivery based investor.

Bajaj Auto - this 2 wheeler major was recommended last week at 970 and has lived up to our bullish expectations and more. The chart patter shows a breakout from a congestion level and the scrip entering a low resistance zone even as the oscillators support the upmove. The scrip is a market out-performer and an institutional favourite. The recent times have seen this company steal the thunder from it's competitors like Hero Honda and TVS Motors as the transition from a scooter maker to a motorcycle manufacturer has been rather fruitful. The pre-result build-up is likely to see the scrip testing the 1100 mark in a conducive market. We recommend a buy for patient investors.

Bharat Electronics - this PSU electronics major is another market out-performer and shows a rising trend since the last quarter. The immediate resistance is at the 558 levels, above which, the scrip enters a low resistance area. The oscillators are showing a bullish trend and the scrip has a high relative strength as the oscillator reading is over 300 ( times stronger than the Sensex ). We recommend a buy on the counter once a breakout is confirmed.

Bank of India - this banking PSU is making higher tops and bottoms formation and is getting support at the 13 day SMA as shown on the daily chart. The traded volumes have shrunk on the upmove, which is a mtter of slight convern. The breakout above the 55 levels will see an accelerated upmove especially if the same is accompanied by volumes higher than 12 lac shares per day on the NSE. The scrip is likley to test it's 200 day SMA which is placed at the 58 / 59 levels in the coming week in a conducive market. We recommend a trading buy on the counter.

Gujarat Ambuja Cements - this cement major is showing signs of a surge which is likely to take it higher than it's 52 week highs above the 348 levels. Once a conclusive closing is achieved above this level, the scrip is in a low resistance zone which will take it past the 360 mark in a firm market. This counter is also a strong market out-performer with an exceptionally high relative strength ( not shown in graphic ). We recommend a buy in small lots for the delivery investors / patient traders.

Glaxo - this MNC pharma major is a frequent feature in the recommendation as the sector is likely to be a major beneficiary of the patenting policy change from Jan 01, 2005. India will follow the WTO norms and follow product patents instead of process patents, which will make cheaper cloning by rivals illegal. The MNC pharma giants will launch international drugs only thereafter and earn higher royalty income and the sector is on the verge of accelerated growth. We re-inforce our belief in this stock and recommend a buy on this counter. The scrip is a strong out-performer and the oscillators signal a bullishness which is a positive indicator.

HCL Tech - this technology heavy-weight is showing signs of an uptrend as the results season draws closer. The scrip exhibits a higher tops and bottoms formation and the oscillators are supporting an upmove. The stock is not a strong performer of the caliber notched up by Infosys or TCS and is at best a trading buy. Trades must be restricted to small / medium quantities and should be initiated with a clear view to exploit the pre result upmove.

HDFC Bank - this banking major was recommended recently and has been living upto the bullish expectations. Being a new age, technology savvy bank, the NPA's are relatively lower and the cost per customer is lower. The scrip is trading near it's all time high and is in a low resistance zone. We recommend a buy for the medium / long term players. The scrip is a market out-performer with an extremely high relative strength.

IPCL - this petrochemicals major is in a short term uptrend and is trading above it's moving averages as the pre result run up is likely to gain momentum once the 215 levels are surpassed on a closing basis. The stock is a market out-performer and a trading buy is recommended.

Mastek - This software high momentum play is in an uptrend as the chart pattern suggests a saucer formation. The scrip is trading above it's congestion / previous resistance levels of 355 which is the Dec ' 03 high. The oscillators are pointing towards an upmove and the upward momentum is likely to persist till the results season. We recommend a buy for traders.

Novartis - this MNC pharma major is in a major uptrend as the reasons for the re-rating of MNC pharmaceuticals companies are given in Glaxo above. The stock has given a breakout signal and the oscillators are in an uptrend. The stock is a market out-performer and is a buy on declines for the discerning delivery investor with atleast a 6 month perspective.

SCI - this PSU shipping major is a beneficiary of the recent dividend notification and is also trading with higher tops and bottoms formation since the last 3 months. The oscillators are showing an uptrend and the scrip is a market out-performer as the relative strength reading is nearly double than that of the Sensex. The scrip is a buy for the short / medium term trader / investor.

Tata Power - This power major was recommended by us as a bullish story in the previous edition and has been accurately moving in a higher groove as the scrip attempts to test it's 200 day SMA. The crossover above it's 200 day SMA will be a bullish signal and the scrip closing above this average with high volumes will see a low resistance trade as the scrip goes into a 20 week high. We recommend a buy on the breakout.

Telco - this automobile major is witnessing a bullish trend on sentimental considerations as the oil prices are holding steady in the domestic markets and the scrip has attained a listing on the NYSE. The scrip is likely to face congestion at the 420 levels and if it manages to close above it with higher volumes, the likelihood of testing the previous highs / 200 day SMA is relatively good. A trading buy is recommended on the counter.

Tisco - this steel major is consolidating sideways after a recent upmove as the scrip trades within a band of 280 and 295 levels. A pre-result upmove is likely on this counter as the F&O segment shows a high short sale position accumulated on this counter. A rally past the 297 levels will propel this counter past the 305 - 310 levels. The advance tax paid by this company suggests superlative profits earned by the company in the first half of the year. A buy is recommended on this counter. Our investors having bought the scrip at 285 levels on Friday at 285 levels are advised to hold on to their long positions.

BSE Sensex - the Sensex has re-tested it's channel top and is poised to breakout above it's 12 week bullish channel formation. Traded volumes will play a large part in the trend determination process and the 5550 will remain a support area for this benchmark index. The upsides are likely to see 5785 levels in the coming week and the same maybe achieved after corrections.

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

Nifty 50 - This NSE benchmark is approaching it's channel top which is at the 1785 where minor selling maybe expected. The upsides are likely to be at the 1797 in the coming week - which is an achievable target before selling maybe seen from profit takers. On the lower side, expect a good support base at the 1744 levels which if violated, can see lower levels of 1730 in the near term. Barring routine profit taking, we do not foresee significant selling pressure.

Your call of action - buy the October futures at the current levels and hold with a stop loss at the 1762 levels. Expect profit taking at the 1795 levels in the near term in a conducive market.

Dow Jones Industrial Average - This NYSE benchmark is showing signs of a pullback rally as the channel top is being tested after a lower tops and bottoms formation since Dec 03. Lower support will remain at the 9950 mark and the upsides may see the 10300 levels in the coming week. Should the upmove be achieved on higher volumes, expect the intermediate trend to improve for now.

Dow Jones Industrial Average - Weekly chart

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

Nasdaq - this index is moving in tandem with the Dow Jones and is attempting to surpass the downward sloping channel. The oscillators are showing signs of an upmove and once the 1960 levels are surpassed with higher volumes, expect the 2000 levels to be breached relatively easily.

Nasdaq - Weekly chart

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

FTSE - this UK index has signalled a breakout as the 11 month congestion levels have been surpassed and a close managed above it. The upside target is the 4820 in the coming week if the bullish undertone persists. On the lower side, expect support at the 4565 levels.

FTSE - Weekly chart

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

Trading tips for the week

The put / call ratio is cooling and is currently at the 0.30 : 1 levels and the outstanding positions in the derivatives segment have shown a quantitative fall as the September series ended. The FII investments are continuing steadily.
There is short covering at higher levels in stock futures. That indicates a cautious approach by bears as they have lost money in the September series.
The index heavy-weights are showing strength again. This in turn will boost the indices and cause a feel good factor. The only worry is that this upbeat sentiment should continue.
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.