Trading recommendations - Aug 21, 2004

SBI - This PSU banking major is the largest holder of gilts and will suffer the biggest hit in a rising inflationary scenario as it's portfolio erodes. The higher exposure to the rural sector will be another negative factor for the counter. As we had accurately predicted a breakdown below the 436 levels ( a bearish head and shoulder pattern ) has been seen. We revise our downward target to the 420 levels in the coming week in a bearish market and advocate a sell on advances.

Your call of action - 

• Investors / cash segment players - exit the counter on advances upto 440 and above

• Aggressive F&O traders - Sell the September futures at the 433 levels with a stop loss at the 437 levels. We expect a profit taking level to be 420 - 422 in the near term.

• Derivatives contract size - Market lot = 500 shares, F&O margins = approx Rs 38,000 ( subject to change daily )

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