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Thursday, January 17, 2008

Allahabad Bank Q3 net profit rises by 28%

Riding on robust interest income, Allahabad Bank has reported a 27.58 per cent rise in net profit at Rs 365.05 crore for the quarter ended December 31, 2007 as compared with Rs 286.13 in the corresponding quarter last financial year.

The operating profit grew 59.83 per cent to Rs 521.12 crore as against Rs 326.04 crore in FY07.

Total revenue increased 19.53 per cent to Rs 1,13,835 crore from Rs 95,237 crore. This includes deposits, which increased 20.38 per cent to Rs 68,044 crore from Rs 56,523 crore, and advances, which rose 18.28 per cent from Rs 38,714 crore to Rs 45,791 crore.

Chairman and Managing Director A C Mahajan attributed the performance to the interest income which registered a growth of 30.66 per cent to Rs 4,560 crore from Rs 3,489 crore registered in the FY07 quarter.

“I believe we would reach around Rs 52,000 crore in terms of credit disbursement by financial year-end,” he added.

During the quarter under review, the net non-performing assets (NPA) of the bank decreased to 0.67 per cent (Rs 303.84 crore) as against 0.72 per cent (Rs 273.01 crore) reported a year ago. The net interest margin (NIM) stood at 2.90 per cent during the quarter. Commenting on the interest rate, Mahajan said, “We will wait for the regulator to give some hint, before taking the next decision on the issue.”

The Kolkata-based bank is also planning to raise Rs 300 crore through tier I perpetual bonds on private placement basis in the fourth quarter to maintain the capital adequacy ratio at 13 per cent, which presently stands at 12.84 per cent.

This is for the first time the bank is planning to raise capital through this route. In September 2007, the bank had raised Rs 500 crore through tier II subordinate debt.

“I have told my treasury to raise tier I perpetual bonds, whenever the market conditions are appropriate. They will decide the quantum and timing of the bonds. But, at the moment, I have no plans to raise capital through pure equity,” said Mahajan.

Regarding the proposed insurance business, he said,”The board is meeting on January 22 to take a call on the issue. However, in all probability, it will be launched on 11 February 2008. We are yet to take a final call regarding the type of products which we are going to launch. That should be discussed when the board meets,”

The general insurance business would be a joint venture, in which Japanese insurance major Sompo will hold 26 per cent stake, Allahabad Bank 30 per cent, Indian Overseas Bank 19 per cent, Karnataka Bank 15 per cent, while Dabur, the non-banking partner, will get 10 per cent.

Posted by Srivatsan at 10:20 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.