We keep mentioning in our Daily Wave Analyst that the market is forming a long-term bottom and it is time to start accumulating stocks. The question invariably arises about which stocks to buy. So some discussion on few of the shares listed on the BSE follows next.

First let us look at the stocks in the TMT sector that have suffered greatly in the fall since the 14-02-00 top in the sensex. These stocks are currently down in the dumps. Simple Fibonacci retracement targets for retracement falls as under

We all know that the rally extended beyond rational limits and hence the fall was severe as well in the TMT stocks in the year 2000. It would be too optimistic to expect a 55% retracement or 61.8% retracement as the basis of valuation when they were at their peak has been found to be faulty. So it would be more logical to consider the first two columns as a more attainable targets once the markets start on their long-term rally.

Analysis of some of the shares on BSE follows next.

BAJAJ AUTO LTD.

CMP - Rs. 260.

This stock could have made a long-term bottom at the low of 208 (15-05-01). The upward targets for the next wave upward are Rs. 277, 309.50 and then 361.10.

The price is currently moving sideways between Rs. 280 and Rs. 255. There is considerable support in the band between Rs. 240 to 260. So buying can be done in this consolidation phase with a stop at Rs. 240.

BHEL

CMP - Rs. 145.90

The interesting point to note about this stock is that is has halted just at the 61.8% retracement of its previous upward move from Rs. 115 to Rs. 192.92. We will have to see if the price turns around from here. Keep it on your watch list.

CASTROL

CMP - Rs. 263.

A lot of interest is being generated in this stock due to the open offer by its parent. This stock too seems to have made a long term trend reversal as it is above its 200 day moving average as well. The immediate targets in case of a steep rise are Rs. 271, Rs. 294 and then Rs. 330. Can buy with a Stop loss at Rs. 228.

CIPLA

CMP -Rs. Rs. 1230

There is a sideways movement between 1050 and 1185 on in this scrip since 24-04-01. We would ideally like to see a breakout and close above 1185 as a confirmation that the upward move is continuing.

But this protracted sideways move seems like an ideal opportunity to buy, as the targets in case of a breakout are 1294, 1421 and then 1625. So it is a good long-term buy. Stop loss level can be at 1040.

DR. REDDY'S LAB.

CMP - Rs. 1809.

Dr. Reddy's has been touching new all time highs recently and that makes investors jittery about entering at such high levels. But if we take the long term count from the time it started moving up from the low of Rs. 138 (06-12-96), this stock can touch Rs. 3016 or even Rs. 4346.

Needless to say, it is a good bet for the long term. The price has been reacting after touching an all time high of Rs. 1920. The targets for the reaction are 1670, 1516, 1339 and then 1267. Stop at the first two targets will underline the bullishness in the scrip. The positioning of the 200-day EMA at 1430 will make the region between 1430 - 1500 a likely zone from which the scrip can bounce back.

GRASIM

CMP -Rs. 283.50

The price of this stock is heading downwards. The targets at which the price can be arrested are Rs. 262, Rs. 215 and then Rs. 167.

GUJARAT AMBUJA CEMENTS LTD.

CMP - Rs. 169.15

Another share that we will like to put on the watch list as the downtrend can get arrested at these levels. Fibonacci support exists at Rs. 142.49 where the price halted. We will wait a little more for confirmation.

HINDUSTAL LEVERS LTD.

CMP - Rs. 218

This stock is in an up trend after touching a low of Rs. 177. Currently a sideways move between Rs. 225 and Rs. Rs. 210 is on which could precede a sharp upward movement to Rs. 253 or Rs. 282.

The current reaction has the targets of Rs. 207, Rs. 198.75 and then Rs. 195. Presence of the 50 day EMA and the 200 day EMA at Rs. 210 - Rs. 212 levels plus previous short term bottom there makes the area around Rs. 210 a good place to take long position in these share with a stop at Rs. 190.

INFOSYS TECHNOLOGIES LTD.

CMP - Rs. 3908

The chart of Infosys looks like a mirror image of the sensex chart mainly due to its great correlation with the NASDAQ composite index itself. This share has made a major bottom at Rs. 2720 (12-04-01) which is still holding. The C wave of this upward move has simple targets of 4165, 4782 and then 5779.

Since this is the technology bellwether stock, buying can be done in dips at current levels with a stop at Rs. 3140.

SATYAM COMPUTERS LTD.

CMP - Rs. 175.40.

The chart of this company portrays the devastation that the TMT companies have undergone. The trend in this chart is down along all time frames - short term, intermediate term as well as long term. The next resistance for the price will be at its previous peak of Rs. 198.80 (13-07-01). Beyond this the 200-day EMA at Rs. 265 will prove to be a hurdle to any increase in price.

ZEE TELEFILMS LTD.

CMP - Rs. 117

This scrip made a low of Rs. 71 on 20-04-01 and since then the price has been moving sideways in the band between Rs. 70 to Rs. 150. The targets for any upward move in this stock will be Rs. 117, Rs. 147 and then Rs. 177.