Infrastructure Development Finance Company (IDFC) will acquire the asset management business (AMC) of Standard Chartered Bank in India for a total consideration of $205 million (approximately Rs 830 crore) in an all-cash deal.
The deal amounts to 5.67% of the total assets under management of Rs 14,141 crore of StanChart's AMC at the end of February 2008.
The deal comes after Reserve Bank of India, in December, rejected Swiss major UBS AG’s bid to buy StanChart's MF business for Rs 516 crore, which was 4% of the total AUM of Rs 12,628 crore.
The current deal, like the ill-fated UBS bid last year, does not include StanChart's mutual fund distribution business, which the London-based bank will continue to pursue in India.
"IDFC is a well-respected financial services company, and we are delighted to have reached an agreement with them for the sale of this business. Standard Chartered will remain a distributor of asset management products in India. India is a key market and delivered record results in 2007,"said Jaspal Bindra, chief executive officer, Asia, Standard Chartered.
The transaction, which is subject to regulatory approvals, is expected to be completed in the second quarter.
Rajiv Lall, managing director and chief executive officer, IDFC, said: "This is in line with our wider strategy of broadening our footprint in the asset management business and diversifying our fee-based revenue streams."
According to sources, IDFC will be retaining the existing staff of StanChart MF. The employees have been offered a hefty stay-on bonus.
Japanese major Shinsei Bank, Indiabulls and Credit Agricole were the other contenders in the race to buy StanChart AMC.
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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