Healthy refining margins saw India's largest private sector company Reliance Industries (RIL) posting a 26 per cent increase in its net profit for the quarter ended December 2007 over the corresponding previous quarter.
The company earned $15.4 a barrel from processing oil during the quarter compared with $11.7 in the corresponding previous quarter.
However, net profit grew 162 per cent to Rs 8,079 crore over the corresponding previous quarter on the back of a one-time gain of Rs 4,733 crore from the sale of a stake in its subsidiary Reliance Petroleum Ltd (RPL).
The company gets the bulk of its revenue from crude oil refining and petrochemicals, but also has a presence in retail and textiles.
"I am happy to report that Reliance continues to surpass previous records in financial performance,” said Mukesh D Ambani, chairman, Reliance Industries.
“The new growth platforms around oil and gas, organised retailing and agro-retail initiatives are gathering momentum and the initial response has been very encouraging. Each of these initiatives inherently addresses India's economic and social imperatives," he added.
The company's stock closed 3.3 per cent lower on the Bombay Stock Exchange on Thursday at Rs 2,996.25 against Wednesday's close of Rs 3,098.35.
Explaining the performance, a Mumbai-based analyst said, "The company saves money on crude cost (since its refinery can handle lower grades of oil which are much cheaper) and makes money in refining."
“Besides, being a private organisation, it does not have to bear any under-recoveries, which reflects well on its margins,” the analyst added.
The company also announced that RPL’s upcoming refinery at Jamnagar is expected to be completed ahead of its initial schedule of December 2008.
Reliance Petroleum's refinery, coming up next to RIL's 660,000 barrels per day refinery, will have a capacity to process 580,000 barrels per day.
During the nine-month period, the RIL refinery processed 23.7 million tonnes and achieved an operating rate of 96 per cent. Petrochemicals production grew 4 per cent to 14.5 million tonnes, against 14.0 million tonnes for the corresponding previous quarter.
In this period, RIL also acquired a majority stake in the operations of Gulf Africa Petroleum Corporation (GAPCO) and has started shipping products to the east African market.
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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