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 - Last week, we had advocated that this cement major is in an intermediate uptrend and is trading at the highest levels since March 2000, that was the peak of the Sensex at 6100. Though the Sensex is 3800 levels, ACC is near those levels again - a clear sign of strength. The logic in the cement sector bullishness is that the sales patterns are cyclical and tend to firm up after the monsoons. The current boom in cement stocks is in anticipation of improved offtake and the boom in the housing market. The oscillators are supportive of an upmove and point towards a further rise in an conducive market. Since the stock has appreciated significantly recently, cautious players would do well to buy on slight declines. Previous weeks long positions are in the money and maybe held. Traded quantities should be curtailed. Momentum traders may please note that a breakout above the 209 will see an accelerated upmove.

Ashok Leyland - This south based commercial vehicles manufacturer was another scrip recommended last week and is rallying on the back of a boom in the sector as the business is gradually changing gears. Older vehicles are being phased out, the economy is improving ( CV sales are GDP sensitive ) and oil prices are stable. The company is also rationalising costs, which is likely to show in the financials in the coming quarters. A buy for patient delivery based investors with a lower risk appetite. The 30 day SMA ( simple moving average ) is a historical support and is currently poised at the 140 levels.

Bajaj Auto - This 2 wheeler major is in an uptrend and is reaping the rewards of a re-worked business focus. The company is grabbing market share and exports are being pushed with vigour. The scrip has vaulted above the previous congestion / resistance zone and should it manage to stay above the 650 levels, expect the upmove to extend itself. We see strong support at the 590 levels and foresee the possibility of 700 levels in a conducive market.

Cipla - This domestic pharmaceuticals major is in an uptrend and has cleared the 200 day SMA and and is making higher tops and bottoms. The oscillators are supportive of a rally and the possibility of 910 - 920 in the coming week is not ruled out. What can be a positive for this counter is the possibility of a correction in the markets and pharmaceutical stocks being perceived as a safe bet. Buying is recommended in small lots.

Dabur - Last week, this domestic pharmaceuticals / FMCG major was recommended as it is recouping lost ground as the company is reinventing it's business focus. The "Real" brand of juices are re-launching with a renewed focus and the management reports foray into the oncology ( cancer ), ayurvedic formulations and personal care products. Professional management has been inducted and the company should see improved margins in the coming quarters. The markets are cheering the change in outlook way ahead of the results. The stock has appreciated 40 % in 3 months and will see further upsides in the near futures. The bullishness in the pharmaceutical sector will see improved valuations on this counter also. We re-iterate a buy on this counter.

Gas Authority - This PSU gas major was recommended as a buy between 112 - 118 and was triggered on 5/8/03 & 6/8/03. Those positions are deeply in the money. The scrip is in an intermediate uptrend as the stock has gained over 50 % in the last 15 weeks. The recent media reports of de-regulation of the gas sector is likely to see free pricing ( upward revision ) of natural gas prices. The other positive trigger for the stock is the carriage of fibre optic cable along it's gas grid in Rajasthan & Gujarat, which will result in additional revenues for the company. A buy in small lots for PSU stock enthusiasts. The oscillators are signaling a bullishness in the short term.

Gujarat Ambuja Cements - this cement major has been very profitably recommended by us over the last 2 months and is a strong market out-performer as it's relative strength is invariably higher than the indices. That makes this scrip a safer bet for traders / investors in volatile markets. The counter has had a good run and is likely to continue holding on to gains. Historically, the scrip gets support at the 30 day SMA which is currently poised at the 214 levels. The counter was recommended on 11/7/03, 18/7/03, 25/7/03 and 2/8/03 as a buy on declines. The counter was recommended as a buy at 218 / 220 last week and the trade was executed on 6/8/03. That position maybe held as it is deeply in the money We re-affirm a buy on the counter - albeit on declines.

Grasim - This cement major is in an uptrend as there are multiple triggers for the counter - bullishness in the sector, leadership in the industry due to the L&T synergy and upbeat outlook. The 30 day SMA is a good support in the short / medium term. We advocate a buy on declines in small quantities.

HDFC - This housing finance major is in an uptrend and and has closed above the 440 congestion zone after a long hiatus. We feel that any sustained closing above the 435 levels will see the next upmove commencing. The oscillators are signaling a sustainable upmove in the short term, and the probability of a 465 - 475 target is fair. The boom in the housing finance market is likely to be a positive trigger for the counter. We advocate a buy on the counter.

Hind Lever - This FMCG / MNC major is on the sell list of most major institutional players. The results have been disappointing and the topline is continuing to be a cause for concern. We do not foresee a significant move above the 182 - 184 levels and therefore the stock is a good sell / synthetic sell by way of fixed income strategy. Below a closing of 158, expect a sharper fall.

Hero Honda - This two wheeler major was recommended as a buy at 262 and was executed at that price on 6/8/03 and is deeply in the money. The scrip is in a major uptrend with all the classic criteria of a bull run on the counter being fulfilled - moving averages are pointing higher, stock price bars are making higher tops and bottoms, oscillators are showing strength and volumes are strong. The main triggers are plentiful monsoons, strong rural demand, new product launches and steady petroleum prices. The recent dividend announcement is also an investor friendly gesture. This counter is an institutional favourite and we recommend a buy for patient investors with a medium term perspective and fixed return investors.

HPCL - this petroleum major is showing signs of strength due to a variety of reasons. The shock of delay in disinvestment has been absorbed and the company is launching a super premium brand of petrol for new age cars. The company also plans a rural thrust and these factors have had a combined feel-good-factor affect on the stock price and we expect the price to remain bouyant - should the markets remain firm.

India Cements - This south based cement company was recommended last week on all declines and is now seeing a turnaround in the prospects as the recent numbers announced showed a lower loss this quarter. The boom in the peers is likely to help the sentiments for this counter also as the price is firming up gradually. The oscillators are pointing towards strength and the upmove is likely to continue. This stock is ideal for investors looking for low priced scrips. We put out a buy on the counter.

Indian Hotels - This Tata group hospitality major was advocated last week as having resistance at the 278 levels - which was proved 100 % accurate. The company is witnessing a bullishness in outlook after the Gulf war ended and the business & leisure travellers are likely to boost the bottomlines of the sector. The stock may see a short term resistance at the recent top of 278 and should the counter see a continous close above these levels, we expect a sharper upmove. We recommend a buy on the counter.

IPCL - This petrochem major is in an uptrend and has historically taken support at the 30 day SMA which is validated since the last 14 weeks. The oscillators are supportive of the upmove and the previous resistance levels of 131 levels have been surpassed. Should the scrip close above the 135 levels for the next 2-3 sessions, expect a fresh upmove. We recommend a buy in small lots.

Kirloskar Ferrous - this counter was recommended in our earlier edition of 26/7/03 and has performed reasonably well. The counter is still affirmed as a buy for patient investors with a medium term perspective. Once the counter closes above the 17 - 18 levels consistently, expect a sharper upmove.

Mastershares - this counter has been recommended since May this year and has appreciated from the 10 Rs levels to Rs 13 - a good 30 % return with limited downsides. As we have been advocating, this is a good bet for returns conscious investor. As long as the markets remain in an uptrend, we expect this scrip's NAV to rise and a commensurate rally in the market price. We put out a buy on declines as a major appreciation has already occured.

MTNL - this telecom PSU has seen a run upwards in a bullish market in sympathy with the overall sentiments. There are major negatives for the company - rising competition, two city area of operations, sluggish operational style typical of PSU's, multiple operators per circle and the launch of Tata Indicom in Mumbai. The number of mobile telephony users has actually surpassed the number of fixed line phone users in Delhi. This trend will curtail MTNL's market share and impact future earnings. In short, this stock is an ideal fixed income candidate.

ONGC - this counter was recommended by us last week via SMS at 480 levels and has paid handsome rewards to bulls as it has appreciated over 45 rupees in 2 sessions since then. The positive kicker has been the retail plans by the company and expected liberalisation in the gas pricing. The oscillators are pointing towards a rally and support fresh bullish positions on the counter.

Reliance Capital - This NBFC from the Reliance group is in an uptrend and was recommended earlier - profitably so. The 30 day SMA is a historical support and is currently placed at the 71 levels. We expect the overall markets to be bullish and since RCFT has a major investment in equities, the NAV of it's investment portfolio will appreciate too. We recommend a buy above the 77 levels which are a previous resistance point. The oscillators are signalling a higher probability of a rally - subject to the confirmation of levels above 77.

Reliance Industries - Last week, this old economy leader was recommended as a buy above the 358 mark, a trade which has been highly profitable. The scrip is witnessing an upsurge after it's quarterly results and has also surpassed the 356 resistance in the bargain. This is a positive indicator for the counter. The oscillators are supportive of an upmove and the likelihood of higher levels in the post result sessions is fair to high. Speculative / trading buy recommended above the 366 levels.

State Bank - Last week, this counter was recommended as a buy at the 405 - 410 levels and has been highly profitable. This counter has become a leading investment / trading scrip for traders and institutional players alike. Our investors will recall that we recommended this stock last fortnight at Rs 400 with a stop-loss at the 380 levels and a target of 444. That recommendation has turned out to be highly profitable in the cash and F&O segments. This counter has hit a 9 year high whereas the indices are at 29 month highs. Historical support at the 30 day SMA is strong and therefore, any fall below the 400 levels is not highly likely.

Siemens - This MNC electrical goods major is one of our most favoured stocks as the restructuring efforts of the management are now showing on the bottomline. Expensive debts are swapped / prepaid, VRS implemented and non-core businesses hived off. We advocate a buy on all declines for patient investors. The weekly chart shows the counter making a breakout above the previous highs as the oscillators are supporting the rally. Last week, we had advocated a buy near the 360 levels - a call that has appreciated 10 % in a week. We re-affirm a buy on the counter.

Tata Teleservices - This emerging telecom player was recommended above 10 levels last week and has seen a staggering 40 % appreciation in a week. The company is likely to see a higher market share as the fixed line telephony market witnesses a rapid change. The stock has appreciated 50 % in the last quarter and is a good bet for investors looking for low priced shares. We see good support at the 10 Rupee levels and patient investors with a 1 year perspective will yield high returns.

Telco - This counter has been recommended by us since it was quoted at 170 levels. The company is on a growth path as the passenger car and commercial vehicles sales are firming up. The buying interest on the counter has been high. We expect strong support at the 13 day SMA at the 230 levels and re-affirm our buy recommendation.

BSE Sensex - Last week, we advocated that the Sensex was expected to see a meaningful support at the 3720 levels. On the upsides, we expected selling to emerge at the 3870 - 3890 levels. It may please be noted that the Sensex has seen a high low of 3891 / 3722 respectively. The next minor resistance is at the 3939 and the major resistance will be at the 4127 levels. On the downside, 3722 remains a good support.

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

Nifty 50 - Last week, we had advocated that once the 1200 levels are surpassed, we expect resistance at the 1230 levels. We had also initiated a buy above the 1200 levels with a 15 - 20 point profit motive. That recommendation has been 100 % accurate as the Nifty has seen a high of 1224 levels. The likelihood of the nifty making huge gains without a slight correction are lower. The upmove may see a hurdle at the 1253 levels. On the downside, expect immediate support at the 1184 - 1188 levels.

Your call of action - Derivative traders having initiated long positions may hold the same with a stop loss at the 1175 levels. Take fresh long positions only for trading purposes above a significant closing over 1200 levels, maintain a stop loss at the 1188 levels and a profit motive of 15 - 20 points.

Dow Jones Industrial Average - This old economy benchmark index measures the outlook on the New York stock exchange. On the lower side, the absolute short term support is at the 8925 levels. As per our analysis, the Dow average been unable to surpass the congestion levels for the 10 th week in a row. This is a sign of weakness. Expect resistance at the 9280 and 9400 in the coming week/s. Only after a breakout above these levels is achieved, will a sustainable upmove commence.

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 new economy benchmark index measures the outlook on the Nasdaq exchange. The index has violated the short term averages and fallen with a gap. This signals weakness in the domestic software stocks too. We expect immediate support at the 1610 levels and a possible bounce-back as the oscillators are oversold. However, that should not construed as an end to the bearishness. Should the Nasdaq close below the 1598 levels, expect further bearishness.

Nasdaq - Daily chart

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

FTSE - This index measures the outlook on the London stock exchange. The index has been making higher bottoms and tops on the weekly charts. Last week, we observed that the index has been unable to surpass the downward sloping channel. That resistance point is 4220 which the FTSE must surpass. In the coming week, our investors must watch these levels. On the downside, the support to watch would be 3890 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

Since the markets are likely to be volatile after the Sameer Arora investigation, we advocate trading on thinner volumes.
In the coming week, aim for safety first & capital appreciation later.
The index heavy-weights are now beginning to show strength and as long as Reliance, Hind Lever, Infosys, Telco, Tisco and ITC remain firm, expect the broader indices to be firm also.
We suggest a higher exposure to the steady returns route rather than speculative exposure due to higher risk component.
Adhere to stop losses religously.
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 the stocks mentioned above.