Trading recommendations - May 17, 2004

Reliance - this counter has declined in tandem with the broader markets, only lesser in relative terms. That indicates higher relative strength. The noteworthy aspect of the graphic below is that the weekly chart shows a support from the 52 week SMA at the 465 levels. The retracement pattern of the entire upmove from May 2003 to the Feb 2004 levels is showing support at the 475 levels. That makes the stock a candidate for a bounce back in the near term. We recommend a buy on the counter.

Your call of action - 

• Investors / cash segment players - delivery buyers may accumulate small lots at the 465 - 470 levels and hold with a stop loss at the 450 levels and expect to book profits at the 500 levels in the near term in a conducive market.

• Aggressive F&O traders - Buy the May futures at the 470 levels, maintaining a stop loss at the 460 levels and expect profit taking at the 485 - 490 in the short term in a market bounce-back. Options players may buy the May 500 calls at a premium of Rs 12.

• Derivatives contract size - Market lot = 600 shares, F&O margins = approx Rs 45,000 ( subject to change daily ).

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