The stock market is more than a collection of individual stocks. Stocks tend together naturally into business or industry groups. In almost any market, some groups are rising and some falling. A study of these groups tells us which groups are on the move, so that we can profit in any market environment by taking advantage of specific group trends. A weak stock in a strong group is better than a strong stock in a weak group.

Since the past two weeks we have seen how the pharma sectors moved. The sector is north bound and naturally majority of the stocks within the sectors have been moving up and have been performing better than the Sensex.

Today I will take a look at the telephone cable group. Many of the stocks in this grouphave bottomed out since the past few months and are in a major uptrend. Investors who may be holding long positions in this group can add a few more long positions in some stocks, which are on the verge of moving up. Traders can also look out for long positions in a few stocks in the group.

Birla Ericsson

Birla Ericsson bottomed out in December 1998 and has been in a major uptrend. The stock has been exhibiting ascending intermediate tops and bottoms and has been staying above its 30 WMA. After moving sideways in an ascending triangle, the stock broke out of the strong resistance of 71.5 with a rise in volume. This gave an additional opportunity for traders to pick up long positions and to investors to add to their long positions.

Traders who have added long positions in the stock must hold on with a strict stop loss just below the strong support of 71.50. The breakout of the ascending triangle will give the stock an excellent momentum on the higher side. The weekly momentum indicators for thestock have turned bullish suggesting higher levels in the stock.

Finolex Cables

Finolex Cables is the leader in the group and was the first to bottom out. The stock moved above its 30 WMA and its earlier intermediate top in mid-1998 and went into a major uptrend well before the Sensex. The stock has been outperforming the indices as the relative strength line has been staying above the zero line. The stock is moving in a narrow range as the weekly momentum indicators are in the buy mode while the daily momentum indicators are still in the sell mode, but will soon turn up.

This will result in higher levels in the stock. Investors must continue to hold on to the stock.

MP Telelink

MP Telelink also bottomed out in December 1998, but as the stock was trading below its base price, it was not ripe for investments. This is because majority of the investors would like to get out of the stock when the price of the stocks touches 10. In August, the stock broke above this value with a rise involume and this was the right time for investors to get into the stock. After attaining a high of 17.95, the stock has pulled back towards its long-term moving average, that is, 30 WMA and is poised to zoom up from here. Add to the long positions at the current price with a stop just below 13. Traders can also look out for long positions in the stock at the current price. The stock will soon enter the new high territory and will exhibit a rise in momentum.

RPG Telecom

Recently there has been a rise in the activity in the telephone cable sector as many stocks in the sector have been zooming ahead or are poised to move up. RPG Telecom bottomed out in August and after attaining a high of 49.45, the stock has pulled back towards its 30 WMA. The stock has been hitting the 8 per cent circuit since the past two days and has gone into a fresh intermediate uptrend.

Any minor decline must be used to get into the stock as higher levels will be seen. Investors who are holding long positions in the stock mustcontinue to do so and may also add some long positions in a minor decline in the coming week. Traders can look out for short-term gains in the stock.

Surana Telecom

Surana Telecom bottomed out in July 1999 and has been in a major uptrend after forming a cup-shaped bottom. The weekly momentum indicator for the stock is up while the daily momentum indicator is down, suggesting that the correction in the stock is not yet over. But the daily momentum indicator, which is down, is oversold and could soon signal a buy. With the activity in the sector on the rise, investors can look out to add long positions in the stock in the coming week. Investors must continue to hold on to the long positions as higher levels are expected in the stock.