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Trading Strategy for the week ending April 16, 2000

Nearly 95 per cent of software stocks hit the upper circuit on Friday, so one would find it difficult to take a fresh position especially in the top traded stocks on Monday. The rally in software stock is more of a corrective nature, and for this reason, fresh short-term positions can be avoided at this juncture.

However, there are stocks which have shown signs of consolidation and are not far from their medium-term supports. The stop loss in each case should be the low of March 2000 (in brackets). Stocks like E Merck (Rs 280), Cummins (Rs 336), TELCO (Rs 119), Castrol (Rs 300), Cochin Refineries (Rs 91), Colgate Palmolive (Rs 136), GNFC (Rs 26.75), Hind Lever Chem (Rs 245), Indo Gulf (Rs 32.10), LML (Rs 37.50), L&T (Rs 236.65), NOCIL (Rs 10.95), Parke-Davis (Rs 260), Siemens (Rs 272), SmithKline Consumer (Rs 343), Tata Power (Rs 64), Trent (Rs 74), United Phosphorus (Rs 72) and Videocon International (Rs 55.50) feature in this list.

HDFC: This stock is in resistance-free area and the outlook for the stock is positive. One can take a long position at current level with a stop loss of Rs 440.

India Cements: The stock has made a good base at Rs 78 and is above its short-term resistance levels. The outlook appears positive, and the stop loss for long position is Rs 78. On the upper side, the first resistance is at Rs 95.

Wipro: This is the only software stock which has not broken its medium term support in the recent panic. It has managed to post a double bottom at Rs 4400, and unless this level is broken, the medium term outlook is positive.

By Arc Investments and Consulting

Stocks

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