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.

ABB - This MNC electrical major is in a major uptrend as the weekly bar chart shows. The counter is showing a classic bullish pattern with the price line being higher than the averages and the faster averages are higher than the slower averages. The oscillators are showing a strength in the upmove as the scrip is now a market out-performer. The relative strength comparative shows a rally above the equilibrium and any bullishness in the broader market sentiments will see a further upmove in the stock. We recommend a buy on all declines for the delivery investors.

Ashok Leyland - This commercial vehicles manufacturer is in a firm uptrend as the weekly chart below shows. This stock was recommended by us in our earlier editions dated 02/08/03, 09/08/03, 14/08/03, 27/09/03, 25/10/03 and 01/11/03 ( click here to view our previous editions ) at significantly lower levels and has appreciated handsomely since then. This company's performance is economy dependent and any further improvement in the outlook of the commercial environment will see an improved sentiment for the stock. The scrip has signaled a breakout above it's previous congestion levels by closing above the 250 levels. If the the stock closes above this level sustainably, expect a fresh upmove.

BPCL - This oil refining PSU has closed at the highest level after making a lifetime intra-week high. The stock is a market out-performer and is in a bullish groove. We have recommended this counter repeatedly in our previous editions dated - 05/07/03, 12/07/03, 14/08/03, 23/08/03, 30/08/03, 13/09/03, 11/10/03 ( click here to view our previous editions ). The expectations of an interim dividend is an additional positive trigger for the stock. The 13 week average tends to be a strong support for this scrip as it manages a close above this average. Currently, the average is poised at the 350 levels. Buying in recommended on the counter near this average for swing traders.

Dr Reddy's - This domestic pharma major is in an uptrend as it exhibits a higher tops and bottoms on the weekly chart below. The stock is a strong market out-performer as the RSC oscillator shows. The momentum oscillator shows a continued bullish trend and a further uptrend should be expected. A few FII investors are zeroing in on the counter and that is likely to see the counter in the limelight in the near term. We recommend a buy on the counter.

Federal Bank - this mid cap banking stock is in a major uptrend as the stock has more than quadrupled in 2 years. The bullishness in the sector is likely to help valuations for this stock, especially after the HSBC stake in UTI bank. All mid cap banking stocks are likely to witness a buying interest in the short term and as long as this scrip quotes above the 200 levels, expect it to rule firm. The stock is turning into a market out-performer and the oscillators are turning firm. The stock is rallying on good volumes and we recommend a buy.

Gas Authority - this PSU gas pipeline major is undergoing a major re-rating as the stock is gaining favour with investors and FII's alike. We have been advocating this counter in the past editions dtd - 8/8/03, 14/8/03, 22/8/03, 10/10/03, 31/10/03, 7/11/03 and 29/11/03 ( click here to view our previous editions ) since the price was 130 !! The stock has been a superb performer and has yielded good profits. A closing above the 183 mark will propel the scrip in a new trading zone and see an accelerated upmove. The RSC ( relative strength comparative ) oscillator shows a reading of 130 - which makes this counter a market out-performer.

Glaxo - this pharma MNC has been a repeated feature in out recommendations and has performed as per our expectations. This scrip was recommended in our editions dated - 05/07/03, 19/07/03, 15/08/03, 23/08/03, 30/08/03, 13/09/03, 20/09/03 and 11/10/03 ( click here to view our previous editions ). This stock is clearly headed for better times as the counter has hit a new 3 year high. The scrip is a strong market out-performer and is likely to be the biggest beneficiary of the EMR regime from 2005 onwards. We recommend a buy on all declines.

Hind Lever - this counter has shown a surprise upmove after months of range bound trade. The trigger is reportedly higher tea prices and the company reportedly sitting on a big stock of tea. The counter is likely to encounter resistance at the 189 - 191 levels above which a further upmove is possible. This counter has been recommended earlier on the short side and has been a good instruments in our fixed income plan also. Earlier recommendations on the counter have been on 19/07/03, 02/08/03, 09/08/03, 26/10/03, 01/11/03 and 22/11/03. ( click here to view our previous editions ).

ICICI Bank - this bank has been a strong market out performer and was recommended by us ever since a breakout occurred above the 195 mark. The earlier reco's were dated 02/08/03, 23/08/03, 26/09/03, 04/10/03, 26/10/03, 01/11/03 and 08/11/03. We feel this scrip is likely to continue it's upmove and get support at the 245 mark. A buy is re-affirmed on the counter.

Indian Hotels - this hotels and hospitality major from the Tata group has been recommended by us repeated at significantly lower levels in anticipation of higher tourist traffic, upswing in the economic / trade outlook and forex earnings. The reco dates were - 02/08/03, 09/08/03, 11/10/03, 25/10/03 and 01/11/03 ( click here to view our previous editions ) and investments in the scrip have been repeatedly profitable.

Polaris Software - This software mid-cap is in an intermediate uptrend. The company has completed the 6 sigma certification last year and is garnering market share in the EU financial solutions market. The counter is showing an upward channel formation which is over 90 days old and therefore an important indicator. The stock is currently over the upper trend-line and has completed the breakout above the 190 mark. Our investors will recollect that a similar pattern was seen in NIIT some weeks ago 8/11/03 ( click here to view our previous editions ) when the stock witnessed a breakout above the 180 levels. We recommend a buy in small lots above the confirmatory breakout levels.

Ranbaxy - This counter has signalled a breakout above a bullish triangle and is headed for better times. We have been recommending this counter in our previous editions dated 05/07/03, 12/07/03, 19/07/03, 23/08/03 and 01/11/03 ( click here to view our previous editions ). Being a market out-performer, this scrip is likely to remain stable even in correcting markets and therefore a relatively safer hedge against volatility. A closing above the 1088 mark will breathe life into the rally again.

BSE Sensex - We have been predicting a resistance at the 5260 levels which need to be surpassed on a closing level before a secular upmove can be seen. On the downside expect support at the 5050 levels in the near term. Watch these two levels for a breakout / breakdown in the markets. Our view is initial weakness in the markets and a possible recovery in the latter half.

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

Nifty 50 - Through out last week, we had advocated that the Nifty was expected to show strength above any closing above the 1685 mark. That was proved accurate and the index has been unable to manage to do that. The short term momentum oscillators are showing over bought levels and therefore a fresh fall is not ruled out. We expect the 1600 levels to be good base for the index and fresh entry by way of buying calls is advocated.

Your call of action - We advocate fresh trades on the Nifty on the long side only on declines that too in an indirect fashion by selling puts or buying calls to be on the safer side. Sell the December 1590 puts at a premium of Rs 10 or above and contemplate buying the 1660 calls at a maximum premium of Rs 22

Dow Jones Industrial Average - This old economy benchmark index measures the outlook on the New York stock exchange. The outlook for the index is range-bound on account of flight of resources from equity to bullion, year end redemptions and profit taking at higher levels. Should this index violate the 9,660 mark, expect an accelerated fall upto the 9325 levels. On the higher side, expect resistance at the 9950 levels which will be a strong inflection point.

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. This index has made a new 22 month high recently and has been advocated by us as making a saucer formation. The relative strength of this index is significantly higher than that of the Dow. The 1900 levels will be a short term support for the markets, below which the a fresh slide to the 1820 levels is possible. On the upsides, expect resistance at the 1995 levels. Only above the 2000 mark, will the index show any signs of revival.

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. As we have been forecasting a 4400 level resistance, this index is unable to surpass that point on a closing basis and show any short term strength. The upsides will see strong selling at the 4460 levels and support at the 4290 levels. Our outlook is better for this index as compared to the Dow Jones and Nasdaq.

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 has climbed to the 0.23 : 1 levels and the outstanding positions in the derivatives segment have shrunk slightly. However, this need not be construed as an immediate cause of worry. Keep watching the outstanding positions for any signs of withdrawal of funds from the markets.
The weakening US $ has been nagging the technology sector and scrips have remained nervous. Keep a close watch on the forex markets in coming days.
Trade cautiously as compared to the previous week as the outlook is guarded. The undertone is slightly nervous and worries exist on slowing down of FII inflows due to christmas holidays. We have been pointing out this fact since 3 weeks.
The NSE imposing higher margins and cutting overall exposure levels is likely to keep the markets under pressure in the near term. Therefore abundant caution is advised.
Trades must be executed in small volumes and trades in the options segment must be avoided wherever the implied volatility is over 35 - 40 %.
We suggest a higher exposure on the steady returns segment for the coming week due to high volatility ahead.
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.