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.

ACC - This cement major is showing signs of sluggishness at higher levels as the graphic shows. The 272 levels are proving to be a hurdle that this scrip is unable to surpass. The moving average crossover method has signaled a weakness and the momentum oscillators are already in a sell mode. The scrip gets a last mile support at the 261 levels below which a closing will cause an accelerated fall. We recommend a short sale on the counter subject to a confirmatory fall.

Bank of Baroda - this PSU banking major was profitably recommended in the last 2 editions and has lived up to our expectations. The scrip has broken below a bearish trendline which is now a confirmed head & shoulders formation. What is noteworthy is that the scrip has been unable to close above the 13 day SMA in 4 weeks and that will be an effective resistance on the upsides. The head & shoulders formation being a measuring move, it is safe to expect a level of 142 / 144 in a weak market in the short / medium term. We recommend a short sale on the counter on all advances.

Infosys - This software bell-weather was recommended as a buy and has been living up to our bullish expectation. We re-iterate our faith in the scrip to the extent that this is the only bullish call taken by this edition. The US political scenario is likely to be amply clear in a few weeks and rising trends in oil prices will weaken the Rupee against the US greenback, which means higher forex income for tech companies. The scrip is making higher tops and bottoms formations and is a market out-performer as the relative strength reading is high. Noteworthy aspect of this chart is the 30 day SMA which has not been violated on a closing basis since May 04. Currently placed at 1700, this level is a very strong support for the scrip. We recommend a buy on major declines.

Maruti - this auto major is making lower tops, though not a lower bottoms formations just yet. The scrip is unable to close above it's 30 day SMA and that is a good short term cap on the upsides. The 349 levels are a 6 week support below which, the stock is likely to turn weak and experience an accelerated fall. The fall below this trigger will show a confirmed sell signal on the momentum oscillators as well.

Reliance Inds - this scrip is a market maker due to the sheer weightage in the indices itself. With Fridays trade showing a weightage reading of 12.81 %, a 10 point movement in the scrip causes a ripple in the indices. The scrip is coming out with earnings numbers and is showing signs of topping out on the charts. This scrip has fallen post results on a historical basis and this time maybe no different, unless the results are simply beyond expectations. We recommend a short sell on the counter. Note the near double top formation at 565 and a support at the 533 levels which is marked with a short trend-line.

Telco - this automobile major is moving along an upward sloping trend-line and is likely to get support at the 400 mark which is a crucial psychological and technical threshold to watch out for. Should a closing below this level be witnessed with higher volumes in the coming days, expect a 3 - 5 % fall rapidly. Should the crude prices harden further, the scrip will be hard hit. The momentum oscillators are pointing towards a weakness, which will be confirmed by a fall on the price graph. We recommend a short sale on bearish confirmation.

Tisco - This counter has had a spectacular run after a breakout above the 245 mark in Sept 04. Currently, the scrip is consolidating with a support at the 280 levels. Should a close below 280 be witnessed with higher volumes, a critical support would have been violated and a 5 % fall in a few sessions cannot be ruled out. It may also be noted that a fall below 280 will also be a confirmation of a head and shoulder formation which will see 260 levels as a possible target in a weak market. Short selling is advocated on bearish confirmation. Note how the momentum oscillators are pointing towards a weak trend. A sub 280 levels on the price graph will be a conclusive bearish confirmation.

BSE Sensex - The sensex is entrenched firmly into the bullish channel after a brief breakout. The 5600 levels will be a crucial psychological and technical threshold to watch as the 30 day SMA will be violated. Upsides will see resistance at the 5724 levels, above which, a rally is unlikely in the coming week. A fall below the 5600 levels with higher volumes will see a support at the 5525 levels 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 has made lower tops and bottoms formation for the second week in a row and is poised precariously at the 1780 levels which if violated on a closing basis even for a single session will see 1755 - 1760 in the short term. On the upsides, we do not expect a rally past the 1815 levels in the coming week. Short sell below a 1778 breakdown.

Your call of action - Short the November futures below the 1775 levels and hold with a stop loss at the 1785 mark. Expect profit taking at the 1762 levels in a falling market in the short term.

CNX IT - this technology index is showing consolidation as the benchmark heads lower from the recent highs, towards the 30 day SMA where support is likely in the near term. Since the 30 day SMA has not been violated since 4 months, it should be a good support level in the coming week. Buy on major declines.

Your call of action - Buy the November futures at the 2560 levels and hold with a stop loss at the 2520 levels. Expect profit taking at the 2610 / 2630 levels in a conducive market in the near / medium term.

Dow Jones Industrial Average - as advocated last week, the index has fallen to the 9780 levels as per our expectations and has even surpassed it by 22 points. The index is well into the bearish channel and is currently at it's calendar year lows. Elections, high crude prices and earnings worries are dogging the sentiments as buyers stay away from the markets. We expect the 9985 levels to be a strong resistance and downsides can see 9555 levels in a weak market scenario.

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.

ACC I Bank of Baroda I Infosys I Maruti I Reliance I Telco I Tisco I BSE Sensex I Nifty I CNX-IT I Dow Jones I Nasdaq I FTSE I Close window I Print page

Nasdaq - this technology / biotech index is showing higher relative strength as compared to the Dow Jones average. The 1900 levels will be an interesting support to watch in the coming week, below which, the outlook turns weak. Downsides may see the 1875 levels and upsides are likely to be limited to the 1955 levels.

Nasdaq - Weekly chart

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

ACC I Bank of Baroda I Infosys I Maruti I Reliance I Telco 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 UK benchmark is showing higher relative strength as compared to the US markets. Upsides will be limited to the 4765 levels, whereas downsides will see 4530 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.

ACC I Bank of Baroda I Reliance I Telco 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 attrition. The FII investments are continuing at 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 expiry of October series will determine the short term trends.
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.