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Saturday, January 5, 2008

Tata Steel turnover set to touch Rs 1 lakh cr in FY08

The Tata Steel group, comprising Tata Steel and Corus, will post a turnover of Rs 1 lakh crore by the end of March 2008.

Addressing the media, B Muthuraman, managing director, Tata Steel, said, the group was expected to post a turnover of Rs lakh crore by the end of the current financial year. He said the Corus acquisition in the short-term had put pressure on EBIDTA margins but would double in the next five years. “The second wave of synergies between Tata Steel and Corus will help towards doubling the EBIDTA margins,” he said.

Back home, Tata Steel has lined up major investments for expansion of the Jamshedpur plant and for the Kalinganagar greenfield project.

The MD said the company would invest Rs 20,000 crore in the Jamshedpur plant for scaling up capacity from five million tonnes to 10 million tonnes. The company has already spent Rs 6,000 crore on increasing capacity from five to seven million tonnes.

The investment in Kalinganagar will be around Rs 20,000 crore. Both the projects are likely to be completed by 2010.

Speaking about the delay in the greenfield projects in Jharkhand and Chhattisgarh, Muthuraman said the latter was facing problems on land acquisition while the former was delayed due to delay by the state government in announcing a rehabilitation and resettlement policy.

He said the work on Chhattisgarh project was to start in 2008 and would be commissioned in 2012. The Jharkhand project, which is likely to commence in 2009, will start operations by 2013.

Muthuraman also announced a new project in Gopalpur today. Tata Steel, which already has 3,000 acres in Gopalpur, is planning to set up a galvanizing and colour coating line with a capacity of 150,000 tonnes at an investment of Rs 250 crore.

The new unit will come up at the special economic zone (SEZ) proposed by the steel major and notified by the Union government. Muthuraman said it could be a multi-product SEZ and as a first step, Tata Steel had decided to set up the galvanizing line. Tata Steel was looking to rope in partners to develop the infrastructure for the project.

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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.