The Professional Ticker Reader TM

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Flavours of the week                                                            April 10, 2004

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 scrip is making an interesting chart pattern, moving within the compressive pattern of a wedge. The stock made a lower bottom at 235 on Mar 23, 2004 and has encountered resistance at the 270 on April 05, 2004. The stock has closed above it's 13 & 30 day SMA's and will turn bullish only above the 271 levels - that too on a closing basis and with higher traded volumes. On the other hand, if the closing is below the 253 mark, we expect the outlook to become weak in the near term. Looking at the overall outlook in the coming week, coupled with the fact that the cement prices have been hiked in the recent past, we expect the bias to remain upwards. Buy above the 271 only. 

Your call of action - 

• Investors / cash segment players - Buy the counter above the 271 levels and hold with a stop loss at the 265 levels. Your upward target is the 279 mark in a conducive market. Should the markets be outright bullish, expect even higher levels.

• Aggressive F&O traders - Buy the scrip in the April futures only above the 271 levels and hold with a tighter stop loss at the 268 levels. Expect to book profits at the 276 mark.

• Derivatives contract size - 1500 shares, F&O margins = approx Rs 70,000 ( Margins subject to change daily)

BEL - this PSU electronics major is moving in a downward sloping channel and has taken support at the crucial 200 day SMA. It should be noted that the recent bottom at the 450 levels was significantly higher than the channel bottom and the scrip has barely remained below the 200 day SMA. The momentum oscillators are showing an upward buildup of positions and once the channel top trend-line is surpassed with higher volumes, we expect the counter to start accelerating higher.

Your call of action - 

• Investors / cash segment players - delivery players can buy above the 510 levels and maintain a stop loss at the 485 levels. Expect the first resistance at the 515 levels and in a conducive market, expect the next level to be at the 540 mark.

• Aggressive F&O traders - Buy the April futures above the 510 levels and hold with a stop loss at the 504 levels. Expect a target price of 518 in the near term. Should the markets remain exceptionally firm, expect the 524 levels to be a possibility within a short period.

• Derivatives contract size - Market lot = 550, F&O margins = approx Rs 55,000 ( subject to change daily ).

Bank of Baroda - The counter was recommended last week as the bullish wedge formation was advocated as a trigger for purchases. The scrip has taken support at the channel top and closed higher, thereby vindicating a buy decision. The channel top also coincides with the short term 13 day SMA where stop losses should be maintained. The momentum oscillators are pointing towards a further upmove being possible in the near term. Previous weeks purchases maybe held and fresh purchases can be contemplated in small lots.

Your call of action - 

• Investors / cash segment players - Cash segment players can buy at the 250 mark with a stop loss at the 242 levels. Expect to book profits at the 260 - 262 levels. Should the market sentiments be quite firm, expect higher levels of 268 in the short term.

• Aggressive F&O traders - Buy the April futures as long as it remains above the 254 mark and hold with a stop loss at the 249 mark. Expect to book profits at the 260 - 262 levels.

• Derivatives contract size - Market lot = 1400 shares. F&O margins approx Rs 74,000 ( subject to change daily ).

Gail - This counter has seen a consolidation phase which has been a trying time for many a patient trader. The IPO supplies have been absorbed and the selling pressure has ebbed. The sector has seen a strength as the peers in this segment have been market out-performers. The momentum oscillators point towards a further rally especially if the 240 levels are surpassed on a closing basis. Should the traded volumes on this breakout be higher, the upmove will gain credibility. We recommend a buy.

Your call of action - 

• Investors / cash segment players - buy the scrip above the 240 mark on a closing basis and hold with a stop loss at the 228 mark. Expect to book profits at the 254 - 257 levels.

• Aggressive F&O traders - Buy the April futures above the 242 mark after it achieves atleast one day of closing above this level, with a stop loss at the 233 mark and a profit taking target of 252 - 255 mark in the near term.

• Derivatives contract size - market  lot = 1500 shares, F&O margins = approx Rs 72,000 ( subject to change daily ).

ITC - this index heavy-weight is consolidating at the present levels and is likely to breakout with strength above a closing of 1105 levels. The momentum oscillators are pointing towards an upmove. The buy mandate is clear only above the 1105 as the level is a 5 week congestion zone. A closing above this level with high volumes for atleast one day is a pre-requisite for buying.

Your call of action - 

• Investors / cash segment players - Buy above the 1105 levels and hold with a stop loss at the 1080 mark. Expect to book partial profits at the 1125 mark and exit completely by 1135 - 1140 mark.

• Aggressive F&O traders - Buy the April futures above the 1106 if the scrip is closing at / above this level and hold with a stop loss at the 1087 mark. Expect to book profits at the 1125 mark atleast partially and exit completely by the 1130 mark.

• Derivatives contract size - Market lot = 300 shares, F&O margin = Rs 55,000 ( subject to change daily)

L&T - This engineering major is in a major uptrend and has been making consistent higher tops which is a sign of strength. The oscillators are showing a firm undertone and a closing above the 620 mark will see the scrip in a new trading zone, which will have zero / low resistance from the upsides. We recommend a buy above this resistance only.

Your call of action - 

• Investors / cash segment players - buy the counter for delivery above a closing level of 620 and hold with a stop loss of 595 and expect to book profits at the 645 - 650 levels in the short term. We expect higher levels before the results are out.

• Aggressive F&O traders - Buy the April futures above the 620 mark and maintain a stop loss at the 608 levels. Expect profit taking at the  635 - 638 levels.

• Derivatives contract size - Market lot = 500 shares, F&O margins = approx Rs 52,000 ( subject to change daily ).

ONGC - this heavy weight index scrip is showing a strength on the charts as the counter has signaled a breakout above a 7 week congestion level. Should the scrip remain above the 880 levels, expect the bullishness to continue. The counter has suddenly zoomed into the top 5 outstanding long positions in the futures segment in the recent past. This is an interesting development as bullish sentiments are seen in the undercurrent for this scrip. The momentum oscillators are showing a bullishness in the undertone and are in a buy mode.

Your call of action - 

• Investors / cash segment players - Buy in the cash segment at the current levels and maintain a stop loss at the 860 levels. Expect to book profits at the 910 - 920 levels in a conducive market.

• Aggressive F&O traders - Buy the April futures above a 885 level and hold with a stop loss at the 866 level. Expect to book profits at the 905 - 910 levels in the near term, in a conducive market.

• Derivatives contract size - Market lot = 300 shares, F&O margins = approx Rs 46,000 ( subject to change daily ).

Polaris - This counter had given a false move on the charts as a head & shoulder pattern was seen as the scrip surpassed the Rs 200 levels. The whipsaw ( false breakout ) saw the counter sinking below the short term averages and consolidate higher. The counter is at the threshold levels of a fresh breakout above the congestion levels of 195. A buy is recommended for the higher risk appetite trader above the 200 mark.

Your call of action - 

• Investors / cash segment players - buy the scrip above the 198 - 200 mark and hold with a stop loss at the 189 levels and expect a level of 212 - 215 in a conducive market. Buy in small lots only as this is a high risk proposition. 

• Aggressive F&O traders - Buy the April futures above the 199 mark and maintain a stop loss at the 191 levels and expect to book profits at the 208 - 210 levels in the near term.

• Derivatives contract size - Market lot = 1400 shares, F&O margins = approx Rs 61,000 ( subject to change daily ).

Telco - This automobile scrip has broken out of a downward sloping channel and taken support at the upper trendline which validates this breakout. However, the counter is making lower bottoms and tops formation, which needs to be reversed for a buy decision to be clear. We therefore advocate buying on advances only.

Your call of action - 

• Investors / cash segment players - Buy above the 510 mark in a rising market and especially if the traded volumes surpass the 40 lac shares per day on the NSE. Hold with a stop loss at the 500 levels and a target price of 520 in the absolute near term. In an exceptionally firm market, expect even higher levels of 525.

• Aggressive F&O traders - Buy the April futures above the 508 mark and hold with a stop loss at the 502 mark and a target of 515 - 517 levels in the near term. 

• Derivatives contract size - Market lot = 825 shares, F&O margins = approx Rs 80,000 ( subject to change daily ).

Tisco - this scrip is consistently THE highest outstanding long position in the futures segment. The counter is consolidating at the current levels and is on the verge of a decisive breakout / breakdown in the immediate future. The short momentum oscillators are pointing towards a slight upmove and the possibility of a relief rally within the downward sloping channel is fair. Traders can buy on the upmove and consider short selling at the channel top - thereby getting multiple trading opportunities in the coming week.

Your call of action - 

• Investors / cash segment players - Buy in small lots above the 403 levels and expect a target price of 409 in the near term, in a firm market. A stop-loss of 396.50

• Aggressive F&O traders - Buy the April futures above the 405 mark with a stop loss at the 403 levels and a target of 409 levels. Since the buy decision is that of a higher risk proposition, we suggest smaller exposure. Start pressing short sales above the 418 levels with a stop loss at the 424 mark and expect to book profits at the 410 levels. 

• Derivatives contract size - Market lot = 900 shares, F&O margins = approx Rs 68,000 ( subject to change daily ).

BSE Sensex - The Sensex has breached the resistance offered by the bearish channel and is likely to consolidate at the current levels before a fresh upmove is seen. On the higher side, expect resistance between the 5920 - 5980 levels in the coming week and support at the 5730 levels. It is crucial that the Sensex stays above the 5730 mark throughout the coming week. The momentum oscillators are pointing towards a bullish outlook for now. 

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

Nifty 50 - The Nifty has exhibited a similar chart pattern as compared to the Sensex and is currently consolidating above the bearish channel. It needs to stay above the 1820 levels in the coming week, below which the fall will take the Nifty to the 1792 levels. Should the Nifty continue to rally and trend higher, the immediate resistance will be at the 1879 levels. Beyond the 1880 levels, the 1900 mark becomes a fair possibility, especially if accompanied by heavier volumes and positive breadth. We feel the markets are headed higher in the coming week.

Your  call of  action - We advocate fresh trades on the Nifty on the long side only if the Nifty trades above the 1868 levels with heavy volumes. Buying the April futures above that level with a stop loss at the 1857 mark is advocated. A target price of 1880 is advocated in the near term. On the flip side, if the Nifty spot falls below the 1825 levels, short the April futures with a stop loss at the 1838 levels and a target of 1800 in the near term.

Have a  profitable week.

 

Vijay L Bhambwani

Ceo :- Bsplindia.com

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.

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