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 PSU electronics major is in a long term uptrend as the stock has made new all time highs and is a market out-performer. The stock has a very high relative strength and is therefore a good investment for short & medium term players. The 13 & 30 day SMA's are a strong historical support for this counter and the downsides are therefore limited to 400 / 385 levels depending on the severity of the correction. We recommend a buy on this counter on all declines.

Digital Globalsoft - The stock is trading above it's 200 day SMA after April 2003 and is likely to test the previous highs made in May 2003 at 572 & 605 levels. Being a very high beta stock ( volatility measure ), this counter is a speculator / traders delight. Since the technology sector is undergoing a bullish phase, we advise small long positions for the adventurous traders. The oscillators are signalling a bullish phase and the speculative build up is expected to continue till the earnings season.

I-Flex - This counter is fast gaining support from institutional and individual players alike. Having a very high relative strength, this scrip is a market out-performer. The stock was recommended by us above 1370 ( cum-bonus ), after a 1:1 bonus, the same is still in the money. The technology sector is looking upbeat and this counter is expected to lead the tech brigade along with Infosys. Being ex-bonus will impart liquidity on the counter and a buy is recommended as the previous top has been surpassed.

Infosys - This software bellweather was recommended as a buy last fortnight above the 3800 levels and the trade is deeply in the money. The IT sector has seen a revival in the last 3 weeks and the same is aided by the bullishness in the Nasdaq. There are positive reports emanating from the international markets about corporate I.T. spend and that may see higher valuations in the coming weeks. The 200 day SMA is a very meaningful resistance for this counter and the same is poised at the 3800 levels. The scrip has managed to close above the 200 day SMA after 4 months - a sign of strength. The oscillators are signalling a possible bullishness. We recommend a hold at present levels and add on slight declines.

ITC - This cements to hotels major is recommended yet again. Our subscribers were recommended to buy this scrip above the 820 levels and the trade is in the money. The oscillators are suggestive of a fresh upmove once the 865 levels are surpassed. We re-iterate our buy on the counter.

ONGC - This counter has been a very profitable trade for our investors as the entry level above 480 has yielded superlative returns. The oil & gas sector continues to be our favoured sector and this company is well poised to exploit the opportunities therein. The main triggers have been relaxation of pricing controls in the natural gas segment, firm prices and a retail foray on the cards. We re-affirm our buy on the counter. The 13 day SMA is expected to be a firm support for this counter.

Reliance Industries - This counter was advocated by us last week to cross the 400 mark. Buying was recommended above the 380 levels - and the trade has been highly profitable. The scrip has closed at a 30 month high. We re-iterate our view that this scrip is capable of leading the market rally from the front. The company has hiked product prices in the textile segment, it's infocom division has done well and declared excellent results. Since the counter has a high weightage on the indices, the counter is capable of swinging the markets significantly. The scrip is at it's April 2001 levels and is poised to test the 424 levels. We recommend a buy for the aggressive traders.

Tisco - This counter is in a major uptrend and is likely to continue out-performing the markets. The recent news reports of a blast at the Nagoya steel plant is likely to have a short term bullish impact on the steel prices and that will impart an upward impetus to this counter. Once the 270 levels are surpassed a closing price achieved above this level, expect this counter to make a new high. On the lower downsides, expect support at the 13 day SMA at the 256 levels. This stock is a speculative grade recommendation for short term traders this week.

BSE Sensex - Last week, we put forth our estimate to the next resistance at the 4350 levels - and the index closed at the 4369 levels. If the index manages to stay above the 4368 levels, expect a rally upto the 4385 ( minor resistance ) and then major resistance at 4460 levels. The 4460 levels will be the crucial hurdle to watch in the coming week - being the significant high point of February 2001. On the lower side, expect support at the 4250 in the coming week, this level is a double bottom in the short term.

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 the Nifty was expected to top out at the 1390 levels, and we suggested buying the september futures above the 1365 levels. That view has paid off as the Nifty has closed at 1398 levels. We feel that the index has strong resistance at the 1422 levels which will see significant selling pressure. However, the undertone remains bullish so we advocate initiating a short strangle as advocated below.

Your call of action - Derivative traders having initiated long positions earlier may square up the same - if not done so already. Sell the September 1410 calls at a premium of 27 - 30 and simultaneously sell the September 1350 puts at a premium of 15 - 17. Your margin requirements will be approximately Rs 27000 and risk will be relatively low. Square up the sale of call options if the cash Nifty surpasses the 1432 levels. Take positions in small lots only.

Dow Jones Industrial Average - This old economy benchmark index measures the outlook on the New York stock exchange. Last week we advocated that should the Dow manage to close above the 9360 for a few consecutive sessions, we expect a minor breakout upwards. The index is consolidating at the present levels and the next week will be a crucial one for this index. As long as the Dow manages a consistent closing above the 9500 levels, expect the bullishness to persist. Expect a 200 point run upwards to be a possibility. On the downsides, expect support at the 9250 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.

Nasdaq - This new economy benchmark index measures the outlook on the Nasdaq exchange. Last week, we had accurately advocated that the worst seems to be over for this index as it has cleared a short term congestion and attempted to make a new high. The feel-good-factor is likely to percolate to the domestic software counters which were showing signs of revival last week. The index has hit 17 month highs and has boosted the domestic tech stocks which are now trading above their 200 day SMA's. It is crucial that the Nasdaq trade higher than the 1782 levels consistently to signal a fresh run upwards. The next resistance will come at the 1945 and 1963 levels. On the lower side, expect support at the 1815 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.

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 resistance on the upsides would come at the 4300 levels, which has been proved accurate as the index saw a high of 4279 on a weekly high basis. It is crucial that this index close above the 4300 levels consistently to signal a sustained bullishness. In case the index moves higher, expect resistance at the 4465 levels and on the downside, expect support at the 4160 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 sobering at the current levels as it stands at the 0.26:1 since the September series have commenced trading.
The Government's stand on the disinvestment of HPCL & BPCL will determine the short term trend of the markets.
In the coming week, aim for safety first & capital appreciation later. The markets are headed for a speed breaker at 1422 & 4390 on the Nifty and Sensex respectively.
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. Watch these counters for guidance.
We suggest a higher exposure to the steady returns route rather than speculative exposure due to higher risk component.
Adhere to stop losses religously. Await a breakout with a sharp rise in volumes to indicate the next leg of the rally.
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.