Advance tax collections, a bellwether of corporate profitability, have grown strongly in the fourth quarter of 2007-08, prompting analysts to say that the expected slowdown in economic growth has not yet impacted corporate bottom line.
Latest indications suggest advance tax collections, which are paid on the basis of internal estimates of profits, are likely to be over Rs 50,000 crore in the fourth quarter till March 15 this financial year across India.
Companies are required to pay the tax in four quarterly instalments, the last being on March 15 every year.
Finance ministry sources said the trend shows that advance tax collections have grown at a similar pace as overall direct tax collections, which have grown over 40 per cent so far this fiscal.
The list of top 10 companies paying advance tax was led by public sector oil major ONGC, which retained its position of pre-eminence, although its tax payout declined 25 per cent.
However, another public sector oil major — Indian Oil — paid nearly Rs 1,140 crore, nearly double the figure in the comparable period under review.
Two companies saw the highest growth in terms of advance tax payout. Financial services company HDFC more than trebled its payout, while diversified conglomerate Reliance Industries saw the tax outgo nearly treble for the quarter (see chart).
ICICI Bank has paid Rs 250 crore, compared to Rs 125 crore in the year-ago quarter. However, Tata Steel’s advance tax payment declined to around Rs 300 crore, 14 per cent lower than the same quarter last year.
Tata Motors also saw a decline with payout at Rs 75 crore over Rs 190 crore in the same quarter last year.
Mumbai, traditionally the highest taxpaying centre in the country, saw a near 50 per cent growth in advance tax paid by the top 100 companies in the zone.
Sources said the advance tax figures showed that banks, hospitality and software are doing better than sectors like automobiles and cement.
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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