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Thursday, December 20, 2007

Top News - 20th Dec

IFCI invites bids to sell shares in 100 firms

A day after cancelling the stake sale process, IFCI today invited bids from merchant bankers to value and buy shares in unlisted firms to enable the company to sell them.

"We have identified 100 companies wherein IFCI would like to sell off its stake," an IFCI official told PTI.

Merchant bankers and other interested parties are requested to submit bids before January 10, 2008 in this regard, he added.

IFCI has over time acquired stake in many companies either directly or in lieu of debt, he said.

Atul Rai, CEO and managing director, IFCI, had said yesterday: "We need the capital."

IFCI sold its stake in National Stock Exchange and rating agency ICRA this year.

Share of IFCI closed at Rs 76.40 - down 23.6% on the BSE today after the institution aborted the process for equity sale as the highest bidder - the Sterlite-Morgan Stanley consortium - put conditions with its bid.

TVS can sell Flame, says Madras HC

A division bench of the Madras High Court today suspended the interim order restraining TVS Motor Company from booking or selling its recently launched 125-cc bike Flame.

After hearing the arguments of both parties for about two hours on Thursday, the bench suspended the interim order of the single judge and posted the case to January 4 and 5, 2008, for further hearing all petitions. Bajaj Auto had accused TVS of copying its patented DTSi technology in its 125-cc motorbike TVS Flame.

However, TVS responded that the Flame was fitted with a three-valve engine based on CCVTi (Controlled Combustion Variable Timing Intelligent) technology, which is different from the technology used by Bajaj Auto.


Tatas world's 3rd most accountable group

The Tata Group, easily India's most respected business house, has been named the world's third most accountable and transparent company by Britain's One World Trust although US hotel chain Orient-Express has not found it worthy of an alliance.

According to Rob Lloyd, the report's lead author, the assessment is a measure of the extent to which organisations have the policies and systems in place to enhance consistent and coherent accountability to the people they affect." The report ranked GE number 1 and GlaxoSmithKline number 2 among the most transparent and accountable companies.

Tata Group, was however, considered ahead of Coca-Cola, Petrobras, HSBC Holdings, PriceWaterCooopers International and Google, when measured on the parameters of transparency and accountable leadership among global companies.

The annual Global Accountability Report considered the Tata Group at number 10, among the world's 30 most powerful organisations from the inter-governmental, non-governmental and corporate sector, to be accountable to civil society, affected communities and wider public.

Orient-Express Hotels had recently rejected an offer of alliance from Tatas, saying tying up with the "predominantly Indian" hospitality firm will erode the US hospitality chain's brand image. Tata Group's interests range from hotels to steel to salt and software and auto.

One World Trust rated UN Development Programme followed by Asian Development Bank and Christian Aid the most transparent and accountable organisations among world's top 30 organisations.

Stop cartelisation, MRTPC tells cement firms

Anti-monopoly watchdog Monopolies and Restrictive Trade Practices Commission (MRTPC) today held major cement manufacturers, including L&T Cement, Birla Cement, Grasim and ACC, guilty of cartelisation under the aegis of Cement Manufacturers' Association.

Announcing its order after 17 years of judicial investigation, the commission warned cement producers and Cement Manufacturers' Association not to repeat unfair trade practices.

"We issue a cease-and-desist order... And direct them not to indulge in any such arrangement directly or working through CMA," said a three-member bench consisting Justice O P Dwivedi, M M K Sardana and D C Gupta.

Passing the order, MRTPC also directed the cement companies, including Century, Dalmia, Jaypee and Mysore, to file a compliance report within eight weeks.

Posted by Srivatsan at 8:10 AM

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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.