ANAGRAM's WEEKLY BUY - HITACHI

Anagram's Weekly Watch: 19/07/2008

DON'T COUNT THE CHICKENS AS YET

The markets have done well to the close the week on a buoyant note. The two-day recovery on Thursday and Friday has bolstered the daily and the weekly charts and prepared the ground for another assault. But the markets may have to hold it's horses as in between stands a trust vote, that must be successfully taken to move forward.

The market's confidence tells you that the trust vote is likely to be won. I don't think we can take it for granted. Let's not forget the year 2004. Positions were built on expectations that NDA will be swept to power. Instead we got a left backed UPA. The markets sold off. The point I am driving home is that the assumptions which the markets makes do not hold true down the line, the market will have to unwind and it could slither down to the same levels that it began.

At this point of time, considering the inflation and the anti-incumbency factor, any Congress or its allies MP has a slimmer chance of making to the next Lok Sabha. If providence brings him an offer of a BSP or BJP ticket as a lure along with a handful of candies, any logical minded MP, who is not tied to his party ideologies very strongly, is likely to take the bait.

In times like these, one need not take chances, but take cover. We believe the situation is too fluid for any one to take a call on which way the wind will blow on Tuesday. One needs to hedge the portfolio.

On Friday we suggested a Ratio Put Spread to hedge your portfolio. We suggested buying one 3900 strike price Put at Rs 120 and selling 2 Puts of the 3700 strike price for Rs. 60 each. This meant that the cost of constructing this hedge was zero, with only margin money to be paid.

Technical Picks for the Forthcoming Week

STOCK
RECOMMENDATION
CMP
STOP LOSS (Rs)
TARGETS (Rs)

Bongaigaon Refinery
BUY
52.75
50
58,63

NTPC
BUY
173.80
169
185

Stocks Covered This Week

Company
Price

18-July-08

(Rs)
Report Type
Recommendation

& Target (Rs)

HITACHI HOME & LIFE SOLUTIONS
136.05

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