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Friday, February 8, 2008

Emaar MGF withdraws IPO

Emaar MGF has withdrawn its IPO due to poor response.

The company today said the application money would be refunded in 10-15 days.

Emaar MGF would now look at private placement and private equity deals at the special purpose vehicle (SPV) level.

The IPO, which was initially expected to raise over Rs 7,000 crore in a price band of Rs 610-690 per share, was extended and the offer price cut twice to Rs 540-630 per share initially and finally to Rs 530-540 per share.

Wockhardt Hospitals had withdrawn its IPO yesterday due to poor response.

Following is the release issued by Emaar MGF today:

Emaar MGF Land Postpones IPO
* To consider IPO at an appropriate time

Emaar MGF Land Limited (Emaar MGF or the Company), a joint venture between one of the world’s leading real estate companies, Emaar Properties PJSC of Dubai, and MGF Development Limited of India, has withdrawn and postponed its Initial public issue to an appropriate time.

The company decided to take this step as a result of the prevailing adverse market sentiments, fuelled by renewed indications of a US recession and global meltdown.

Emaar MGF has decided to postpone the issue despite receiving applications worth Rs 5,779.36 crore in light of discouraging market dynamics. This decision has been taken despite the fact that the QIB and HNI portions were fully subscribed and the book was already filled to almost 85%. The retail portion had over 225000 applicants demonstrating significant appetite and demand for the issue.

Given the prevailing sentiments in the capital markets it was unclear how well the stock would trade post listing; it has been considered wiser to revisit the markets only when the demand and sentiment is stable and better providing greater value to the investor.

Emaar MGF remains committed to executing its projects in hand and is well funded to ensure that this delayed IPO will not hamper its growth plans. The company expects to return to the market at a later date when sentiment and liquidity conditions are better.

Emaar MGF Land Limited is one of the leading real estate developers in the country with a strong parentage and a diverse land bank spread across 26 cities across India. The company is committed to its mission of developing and delivering unique integrated lifestyle and work place environments and planned developments. The primary business is the development of properties in the residential, commercial, retail and hospitality sectors. In addition, it has also identified healthcare, education and infrastructure as business lines for future growth. Its operations span across various aspects of real estate development, such as land identification and acquisition, project planning, designing, marketing and execution.

The Global Co-ordinators and Book Running Lead Managers (“GCBRLMs”) to the Issue are Enam Securities Private Limited and DSP Merrill Lynch Limited. The Book Running Lead Managers (“BRLMs”) are Citigroup Global Markets India Private Limited, Goldman Sachs (India) Securities Private Limited, HSBC Securities and Capital Markets (India) Private Limited, J.P. Morgan India Private Limited, Kotak Mahindra Capital Company Limited and ICICI Securities Limited.

Posted by Srivatsan at 9:57 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.