Pune-based Deepak Fertilizers and Petrochemicals Corporation (DFPCL) has entered into a heads of agreement with the Norway-based Yara International ASA, a $14 billion fertilizer and specialty chemicals major, to establish a joint venture (JV) for the production and marketing of ammonium nitrate and specialty fertilizers in India.
DFPCL will own 51% of the JV while Yara will own the balance 49%. The JV will also invest in Deepak Fertiliser's 300,000 million tonne (MT) per annum ammoium nitrate plant under construction at Paradip in Orissa.
A spokesperson of DFPCL declined to comment on the size of the investments in the joint venture, citing the Board of Directors of both the companies were yet to finalize the details.
Fertilizer industry sources said typically a midsize to large fertilizer plant would incur an investment of close to $1 billion.
India consumed around 400,000 tonne a year of technical ammonium nitrate (TAN) and the market was growing at around 5-6% per year, driven by strong coal demand for power generation, said a Yara press release.
Ammonium Nitrate is mainly used to produce explosives for the mining industry and in coal production.
Currently Deepak Fertilizers is the only major domestic producer of ammonium nitrate, with an installed capacity of 140,000 tonne. The rest of Indian demand is covered mainly by imports.
"The JV will be value-accretive to DFPCL and will benefit its long term strategy in nutrient management through specialty fertilizers and value-added mining products and services," said Sailesh Mehta, vice-chairman and managing director, DFPCL.
"India has the world's third biggest coal reserves and Yara has proven strengths in safety, production, logistics and expertise in the use of technical ammonium nitrate for explosives (TAN)," said Thorlief Enger, president and CEO, Yara International ASA.
The heads of agreement would be converted into a final agreement after a due diligence and the necessary company and regulatory approvals.
The JV will review opportunities for production, marketing and import of specialty fertilizers in focused states like Maharashtra and Gujarat, where DFPCL has considerable strengths. It will also target the ammonium nitrate market in India, especially the mining and infrastructure sectors.
Yara International ASA, is a global leader in ammonia, speciality and bulk fertilizers and Ammonium Nitrate (AN), industrial gases and other diversified chemical and pollution control products.
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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