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.

Bank of Allahabad - the counter was recommended recently and has proved to be a major hit as it appreciated 25 % in a few days and yielded superlative returns on investment. It needs to be noted that this counter is a turnaround story and a well spread out bank. The re-structuring is likely to propel the bank into a higher profit making organisation. The valuations are likely to be re-rated upwards as the next few quarters earnings figures come in. We re-iterate a buy on declines for the savvy delivery based investor.

Glaxo - This scrip has been recommended by us since 400 levels in June 2003 and has appreciated 75 % since then. The current volatility in the market sentiments is likely to benefit the pharmaceutical sector as the perception is that of a defensive sector. That will see inflows into the sector on lines of rising bullion prices in times of war. Our investors were advocated a buy on this counter at 650 on May 13, 2004 and profits were booked on the same day. We recommend a buy again on declines on the scrip as it is a "must have".

Maruti - this automobile major is a frequent recommendation in our daily & weekly newsletters and was recommended last on May 13, 2004 at 470 and sold profitably at 500 levels. The stock has two strong support triggers which are converging at the same levels. The 380 levels are where the 200 day SMA is placed and is also a strong support on the price retracement considerations. The stock is nearing oversold levels on the short term charts and any significant fall from the present levels is a buying opportunity for the savvy investor / trader.

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.

Tata Steel - This steel major has been advocated by us as a short sell in the recent past by us. The rationale behind the recommendation was the softening international steel price and the hike in production capacity all over the world. The fact that the Chinese economy is undergoing a deliberate cool off is also a likely dampener. However, the worrying aspect is that China aims to be a net exporter in the near future. The steel lobby is now reeling under the impact of slower exports and cheaper imports. We feel that the best days of this sector are over for now. Selling short on advances is recommended.

Tata Teleservices - this counter has been a regular feature in our recommendations as the story remains sound and the outlooks is bright. The company is re-structuring it's business focus and is likely to emerge a stronger, leaner organisation. The scrip is relatively out-performing the markets as the RSC reads 206 ( twice as strong as the Sensex ) and therefore is likely to appreciate faster in a rallying market. We recommend a buy on all declines.

BSE Sensex - The index is firmly back into the bearish channel and also below the 200 day SMA on a closing basis. The momentum oscillators are showing a downward sentiment and all major advances are likely to be exit points for the bulls. We anticipate support at the 4945 levels and resistance at the 5350 - 5400 levels in the coming 2 sessions.

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

Nifty 50 - The Nifty is also making a similar chart pattern as compared to the Sensex. The 200 day SMA has been violated and the oscillators are pointing lower. The support is at the 1525 levels in a bearish scenario and resistance at the 1680 levels in the next 2 sessions. Our expectation of a bounce back is fairly high in the coming two days.

Your call of action - We advocate fresh trades on the Nifty on the long side only on declines. The best option would be to take an indirect approach and buying call options for capital appreciation players. We suggest buying the May 1670 calls at a premium of Rs 18 - 19.

Dow Jones Industrial Average - the US old economy benchmark is in a bearish grip as the short and medium term averages are violated and the index is on the threshold of a long term average support. The oscillators are clearly pointing towards a fall and the immediate base is at the 9830 levels. On the higher side, expect the 10300 levels to be a resistance. Should the 9830 be violated, expect a rapid fall.

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 index measures the new economy sentiments and is under similar pressure as the Dow Jones. The momentum oscillators are in a sell mode and all rallies are likely to be met with offloading by nervous bulls. We feel the outlook is extremely weak below the 1875 levels. On the higher side, we expect the 1990 levels to be a resistance in the near term.

Nifty 50 - 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 UK index is showing higher relative strength as compared to the US indices. Support to watch is the 4300 levels and resistance is at the 4600 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 climbing and is currently at the 0.23 : 1 levels and the outstanding positions in the derivatives segment have shown a qualitative rise, which is a positive sign. The FII investments are continuing to be negative - along expected lines.
There is offloading at higher levels in stock futures. That indicates a cautious approach as long positions in individual stocks is being hedged by Nifty shorts.
The current week is crucial for the markets as the process of government formation and market trend determination will take place.
The index heavy-weights are showing weakness again. This in turn will dampen the indices at higher levels.
The impeding expiry of the May series will see offloading and higher volatility in the near term.
Trades must be executed in small volumes due to the higher volatility expected. Trade fewer counters and conserve cash for future opportunities.
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 any securities mentioned above.