HSBC Financial Services Middle East has picked up a 4.99 per cent stake in Yes Bank in the secondary market.
The global investment arm of HSBC has been investing in the bank since January. “Like Rabo Bank investments, HSBC Financial Services Middle East’s investment in Yes Bank should be viewed as a financial investment. There is no arrangement for any cooperation with HSBC at this stage,’’ said Yes Bank managing director (MD) and chief executive officer (CEO) Rana Kapoor.
Rabo Bank holds around 18 per cent in Yes Bank.
During a recent interaction with Business Standard, HSBC group general manager and India head Naina Lal Kidwai had said, “HSBC has global investment arms which keep evaluating investment options. They invest in good portfolios.”
While HSBC refused comment on Tuesday, the strategic investment in Yes Bank has set the market abuzz with rumours. This is the second strategic investment made by the HSBC group in a bank after its investment in Axis Bank (earlier called UTI Bank). The group now holds a 4.96 per cent stake in Axis Bank.
HSBC had originally picked up a little over 14 per cent stake in UTI Bank and had to pare it to 4.99 per cent at the behest of the Reserve Bank of India (RBI).
In the recent past, Citigroup had picked up around 12 per cent in HDFC. Analyst saw Citi’s acquisition, and its indirect stake in HDFC Bank, as a strategic move to get ready to buy an Indian bank once the RBI eases the rules for foreign banks to enter India.
On the news of the HSBC investment, Yes Bank shares rose 20.53 per cent on the Bombay Stock Exchange to close at Rs 172.05.
“HSBC also seems to be gearing up for 2009. The bank wants to expand its retail reach by setting up an NBFC. But regulatory approval is pending. Additionally, the branch expansion restrictions on foreign banks may have also forced the group to look at other options in India,’’ said a banking sector analyst at a brokerage.
At present, HSBC has about 47 branches and around 170 ATMs. Yes Bank has 60 operational branches, 75 ATMs and has received RBI approval to set up additional 57 branches and 125 ATMs.
According to the RBI norms, foreign banks are allowed to buy up to 5 per cent stake in a bank. Annually, all foreign banks operating in India receive permission to open around 12 to 14 branches.
According to the RBI road map, the banking sector may be further opened up to foreign competition after the end of March 2009, giving foreign banks more freedom with respect to acquisitions. At present, they can acquire weak banks that are under restructuring. However, the RBI has not made public any such list.
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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