Prices may remain firm in the coming months.
The cement industry is likely to add around 15 million tonnes of fresh capacity in 2007-08 – a little over half of the 27 million tonnes it had talked about at the beginning of the financial year.
As a result, the cement capacity in the country will be 182 million tonnes by March 2008, 8.5 per cent short of the target set by the working group on cement industry for the Eleventh Five Year Plan (2007-12).
Analysts felt this could keep cement prices buoyant in the months to come.
The industry and the government have been locked in a confrontation for several months now over high cement prices, prompting the Centre to allow duty-free imports. Some quantities of imported cement have already reached the Indian markets from Pakistan.
Nine months after promising to put up additional capacities of 27 million tonnes, cement companies have added a mere 11.50 million tonnes till date. While the Cement Manufacturers' Association says the industry has so far added 6.35 million tonnes, the figure does not include the capacity expansion of two companies – ACC and Binani Cement. ACC added 1.4 million tonnes at its two plants and Binani added 4.1 million tonnes recently.
Market players said the industry may add another 3.5 million tonnes in the next three months, taking the total tally to 15 million tonnes.
Market players said that the delay in projects was mainly on account of supply constraints on the plant and machinery front and environment clearances from the government. H M Bangur, president, CMA, and the managing director of Shree Cement, said, "We will not be able to meet the target as project delays are taking place. There will be at least one quarter’s delay."
"As most of the projects are greenfield ventures, unlike the earlier expansions which were through modernisations, debottlenecking and brownfield projects, the time being taken for operationalisation is more,” said A K Saraogi, chief financial officer, JK Cement, adding: “Additional land requirement and delay in delivery of equipment are adding to the problems."
Market players said that the gestation period for the newer plants had increased by around 6-8 months. Normally it should have been 20-22 months, but now it was reaching 26-28 months, they added.
K C Jain, managing director, Mangalam Cement, said, "My assessment is that by March, 2008, industry will add another 6-7 million tonnes."
Understanding Short Term Trading
Before I begin, this blog is not for intraday traders. My definition of short term implies duration of around 2 to 3 months.
Short Term stock picking is no rocket science, but rather a visual interpretation of technical charts. A basic moving average on a time frame chart will show the direction of the securities movement.
Moving averages is a mathematical results calculated by averaging a number of past data points. Moving averages (MA) in it's basic form is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. Once the value of MA has been calculated, they are plotted onto a chart and then connected to create a moving average line. Typical moving averages used for short term trading are 50 MA and 100 MA.
Types of Moving Averages
1) Simple Moving Average (SMA)
SMA is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. The usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result.
2) Exponential Moving Average (EMA)
EMA overcomes the limits of SMA, where more weight is given to the recent prices in an attempt to make it more responsive to new information. When calculating the first point of the EMA, we may notice that there is no value available to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving average and continuing on with calculating the EMA.
The primary functions of a moving average is to identify trends and reversals, measure the strength of an asset's momentum and determine potential areas where an asset will find support or resistance. Moving averages are lagging indicator, which means they do not predict new trend, but confirm trends once they have been established.
A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in an asset when the price is trading above a moving average.
In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 50 days or less. Looking at moving averages that are created with a period of 50 to 100 days is generally regarded as a good measure of medium-term momentum. Finally, any moving average that uses 100 days or more in the calculation can be used as a measure of long-term momentum.
Support, resistence and stoploss can be infered by referring the closet MA below or above the market price. The other factor that is used in short term momentum is the trading volume. The moving averages along with the trading volume can provide a better insight to short term movement.
Markets are moved by their largest participants - I believe this is the single most important principle in short-term trading. Accordingly, I track the presence of large traders by determining how much volume is in the market and how that compares to average. Because volume correlates very highly with volatility, the market's relative volume helps you determine the amount of movement likely at any given time frame--and it helps you handicap the odds of trending vs. remaining slow and range bound.
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