Petronas will buy 63.3 mn shares and Tamarind 49.7 million.
Cairn India, the Indian arm of British oil and gas company Cairn Energy, has decided to sell 5.37 per cent stake to Malaysian state oil and gas firm Petroliam Nasional, or Petronas, and Singapore-based Orient Global Tamarind Fund for Rs 2,534 crore ($625 million) to fund expansion plans.
The company will sell a total 113 million shares – 63.3 million shares to Petronas and 49.7 million shares to Tamarind, New Zealand billionaire Richard Chandler’s investment group – at Rs 224.30 each.
The share sale price is 1.8 per cent lower than Cairn India’s closing price on March 14 and a 40 per cent premium to its listing price of Rs 160.
The Cairn India share lost 6.15 per cent (Rs 14.05) to close at Rs 214.35 on the Bombay Stock Exchange today, the day the benchmark Sensex dropped more than six per cent.
Following the share sale, Petronas’ stake in Cairn India will rise to 12.7 per cent, while Orient Global Tamarind will own 2.6 per cent. Cairn India’s holding will be reduced to 64 per cent.
The share sale proposal was approved by Cairn India’s board of directors today and will be taken up for shareholders’ approval on April 16.
The shares will be locked-in for one year from the date of allotment. “The stake has been sold at a fair price considering that Cairn India’s floating price of the IPO was at Rs 160,” a company spokesperson said.
Petronas had picked up its existing stake in Cairn India ahead of the IPO in 2006. The company’s market capitalisation stood at Rs 24,464 crore when it listed in January 2007.
Cairn India plans to utilise the sale proceeds to fund its expansion plans and ongoing projects, which includes production of oil at Mangala, Rajasthan, by next year. ONGC is Cairn’s partner in the project.
“The company is confident of producing commercial oil from Rajasthan in 2009. The private placement will help the company to meet its investment plans and provide greater financial and operational flexibility,” Cairn India Chief Executive Rahul Dhir said in a statement.
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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