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.

Bajaj Auto - this two wheeler major is in a major uptrend and has managed to close at at it's highest on the last trading day of the week - inspite of a weak market. The counter is showing tremendous relative strength and has not violated the 30 day SMA support which should be taken as the immediate stop loss. Fundamental reasons are also in favour of the stock as good monsoons, export potential and new launches are boosting the topline / bottomline figures. We recommend a buy.

Bharat Forge - This auto ancillary stock has been recommended by us in over 7 editions in the last three months ( click here to view previous editions ) and we have successfully caught the upmove since the price was in the 275 - 280 range. The stock has reacted on profit taking and fallen over 100 points which makes it an attractive medium term investment. The bouyant sales in the automobile sector will see a good topline / bottomline growth in this company and the scrip gets good support at the 30 day SMA ( currently at 440 levels ) where it can be bought. Last week we had recommended a buy at 470 with a stop loss at the 435 levels. We revise our recommendation of the stop loss and categorise it as a good buy on declines. The price retracement pattern shows a 38 % retracement coming at the 420 levels from a high of 540. Discerning investors must accumulate this counter on declines.

BHEL - this electrical PSU major is out-performing the broader markets as it makes new 52 week highs on a regular basis. The relative strength displayed by the counter makes it an attractive investment for the patient investor. A good order book position and acquisition of fresh contracts are positive triggers that are likely to keep this scrip going. Investors may note that this company is the single largest dividend payer to the govt.

Glaxo - Another pharma major ( MNC this time ) which is in a major uptrend. This counter has also been a frequent feature in our editions ( click here to view previous editions ) and has been a profitable investment. The stock is perceived as a safe haven for investment and especially so during high volatility in the markets. This company will by and far be the biggest beneficiary of the EMR / IPR regime after 2005. A good buy for the patient investors as the scrip is a market out-performer.

HPCL - This counter has been in the eye of the storm and the SC verdict has let the cat loose among the pigeons as massive unwinding has knocked out many a bull. However, we feel that the counter has run through with the selling pressure and the worst is over. The price / volume action of the last week suggests that the panic sales are unlikely to be repeated and a slow consolidatory phase may commence. We recommend a buy on declines for the counter especially since the 200 day SMA support exists at 320 levels.

I-Flex - this software major is a strong contender for the top slot category as it is rapidly gaining market share in the European Union ( EU ) and US markets. The counter has one of the highest relative strengths in the category and has proved itself to be investor friendly by way of a liberal bonus. Liquidity is likely to improve as a result and result in lower impact costs. We strongly recommend buying this counter as the pre-result run up will see higher levels on this counter.

Infosys - This software bell-weather was recommended by us ever since it crossed over the 200 day SMA ( 3800 levels ) and has been profitable though volatile investment. It should be noted that intraday volatility apart, the counter has managed to close above it's 13 day SMA ( currently at 4200 ) which is a heartening sign. We expect a rally in the pre-result run upwards and recommend a buy. The high relative strength of the counter makes it an attractive bet.

Mastershares - This stock is one of the most profitable investment and has been recommended since it was quoting at Rs 10 ( click here to view previous editions ). Being a NAV based scheme, the scrip will move in tandem with the market. The scrip faces little / no resistance above the 13.20 mark and should see levels of 15 if the market continues to rally. This is a recommendation for the returns conscious investor.

Reliance - This counter has been advocated by us as capable of leading the rally from the front. Having recommended this scrip on multiple occassions profitably, we feel every trader should exploit opportunities on this counter every time it takes support at milestone levels. Currently, the scrip is at it's 30 day SMA which is a good medium term support. Buying is recommended.

Satyam Computers - this software major is exhibiting a sideways movement ahead of the earnings season. Being a high beta ( volatility ) counter, it is a favourite among traders - especially so in the pre-result season. We expect a good lot of trading opportunities on the buy side before the numbers are finally out.

Siemens - This counter has been recommended ever since the price surpassed the 360 levels ( click here to view previous editions ). The aggressive re-structuring efforts of the company are paying off and the price is reflecting the same. The scrip is a good buy on all declines for the patient investor.

BSE Sensex - Last fortnight, we put forth our estimate to resistance at the 4460 levels. The 4460 levels will be the crucial hurdle to watch in the coming weeks - being the significant high point of February 2001. On the lower side, expect support at the 4110 in the coming week. The Sensex has not closed below the 30 day SMA since the commencement of this rally and should be the short term trend determinator for short term players. The immediate resistance on the upsides will be encountered at the 4300 levels.

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 encounter strong support at the 1300 levels which coincided with the 30 day SMA as well as the 38 % retracement from the recent high. That computation has been proved accurate as the index has managed a close above the 1300 levels. We foresee short term support at the 1299, failing which the 1248 is the last support ( Aug 25, 2003 low on bomb blast day ). However, the probability of the upside is greater than the downside.

Your call of action - Derivative traders having initiated short straddles as advocated in the previous week should positions till further notice as the trade is in the money.

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 9500 mark for a few consecutive sessions, we expect a 200 point run upwards to be a possibility. That has proved to be prophetic as the index has closed at 9646. The Dow is trading at near May 2003 highs which is a sign of strength in addition to the breakout from the trendline resistance. One can expect to see 9800 levels this week - barring unforeseen circumstances. On the downsides, expect support at the 9280 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 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 1852 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 and then the 1788 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 4330 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 0.23:1 since the September series is nearing a close, we expect a higher volatility. Therefore trades must be curtailed in volumes / contract sizes. Safety first should be the maxim this week.
The Government's stand on the disinvestment of HPCL & BPCL will determine the short term trend of the markets.
The index heavy-weights are now beginning to show fatigue and as long as Reliance, Hind Lever, Infosys, Telco, Tisco and ITC remain weak, expect the broader indices to be under pressure also. Watch these counters for guidance.
Trade fewer stocks and keep exposure light till the markets signal a secular directional movement.
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.