After steel, it’s the turn of cement manufactures to jack-up prices. Cement prices are now inching up across most markets, the first round of widespread ramping-up of prices following a self-imposed moratorium agreed to by cement manufacturers last March.
While South-based cement manufacturers were the first to increase prices, the trend is pretty much catching up in the Northern and the Western markets as the demand-supply mismatch continues across the country.
According to industry players, price increases of up to Rs 10 per 50-kg bags are being witnessed across some regions, with further escalations predicted during the course of the year as no major capacities are expected to come up until the end of calendar year 2008.
TN condition
Industry players said a favourable demand-supply situation in the South enabled cement firms to kick-start price increases. In Tamil Nadu, the State Government has already stepped in to ask manufacturers to rein-in prices. There are reports of price increases of around Rs 5 per bag across Uttar Pradesh and Maharashtra, with key market such as Mumbai already facing price hikes of over Rs 5.
Cement firms contend that the price rise is in sync with increasing commodity prices, with steel prices having already been hiked by 10 per cent recently. “Demand for cement is expected to grow faster than supply with rapid infrastructure development and real estate projects taking off across most towns and cities, leading to firmer prices,” a Delhi-based analyst said.
Demand centres
Also, a mismatch in the location of key demand centres and upcoming production facilities could contribute to the price trends going forward. While the Northern region led the growth in cement production last year, the West topped the consumption list, accounting for around 16 per cent, followed by the South and North zones with 11 per cent each. This trend is likely to be seen during 2008 as well.
Further, even if the supply situation were to catch up with demand by 2009-10 (as per projections), Southern markets, including Tamil Nadu and Kerala, are expected to be partly insulated from a correction because of their large distance from the North, where surplus capacities are first expected.
The Western region, which could have serviced some Southern markets, is expected to be in deficit for at least the next three years, according to analysts.
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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