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Saturday, February 9, 2008

Car sales up 9% on new models

Thanks to the new models, the car industry maintained its upward mobility, growing at 9 per cent and selling 113,899 units in January in the domestic market. The industry had sold 104,501 units in the same month last year.

Market leader Maruti Suzuki grew by 2 per cent, whereas competitors - Hyundai and General Motors - logged 39 and 46 per cent growth, respectively, riding high the demand for new models such as i10 and Spark.

Tata Motors, third largest car maker, had a disappointing month again as its sales slid by 12 per cent, the Society of Indian Automobile Manufacturers (Siam) said in its monthly figures today.

Aniket Mhatre, auto analyst, Prabhudas Liladhar, said, “Due to a high base in January 2007 where the industry had a good growth, the increase in last month is in the single digit. Tata Motors, however, saw its sales falling this year. The trend is expected to continue in the remaining two months.”

Analysts said due to production constraints, Maruti will be able to produce only 70,000 units a month. GM, too, is facing a production constraint for its most popular model Spark at. The company is building a new plant in Maharashtra, which will become operational by the year-end.

Hyundai India, however, is planning to hike its annual production capacity to 600,000 units from 300,000 units.

The overall passenger vehicle segment, comprising cars, utility vehicles (UVs) and multi purpose vehicles (MPVs), grew by 8.5 per cent in January with 147,186 units sales against 135,654 units in the corresponding month last year. Bike makers, including Hero Honda, Bajaj Auto and TVS Motors, faced a negative month once again as sales declined by 14 per cent year-on-year.

Although Hero Honda managed to stay ahead, it had to satisfy with just a 0.16 per cent growth. Bajaj Auto and TVS Motors recorded 15 per cent and 44 per cent drop in sales, respectively.

Aniket Mhatre added, “Hero Honda was able to put up a better show due to better penetration. The company has a larger product range than the Bajajs and TVS. Bajaj’s XCD bike has not seen huge sales and the company has also witnessed a substantial drop in the sales of its 100cc models.”

Posted by Srivatsan at 2:50 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.