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Tuesday, March 25, 2008

R-Power to spend Rs 3,000 cr for mines to fuel Sasan project

Awaits government nod for plan to develop mines in a strategic partnership with North American Coal Corporation.

Reliance Power Limited, the flagship company of the Reliance Anil Dhirubhai Ambani Group(ADAG), plans to invest about Rs 2,500-3,000 crore over a period of three years, to develop three coal mines to fuel its Sasan Ultra Mega Power Project in Madhya Pradesh.

“We have submitted the plan for the pit-head mines, to be developed in a strategic partnership with the North American Coal Corporation (NACC), to the ministry of coal and expect the final clearance within a few months,” a top Reliance Power, official told Business Standard.

NACC, the largest lignite coal producer and among the top ten coal producers in the US, will provide technical assistance, including evaluation of geological data, mine planning and design, supervision of mining operations and training for Reliance professionals, according to the memorandum of understanding (MoU) signed with Reliance Power.

Biggest ever
Sources said the coal mining plans of Reliance Power for the Sasan project would be one of the largest and unprecedented in India, with advanced coal handling equipment.

One of the transportation vehicles (of 240 tonne capacity) that will be used is equivalent to the size of four railway wagons.

The company has placed orders for modern coal handling equipment with four to five leading manufacturers in the US and Europe, said the official.

Sasan Power Limited (SPL), a fully owned subsidiary of Reliance Power, has about 750 million tonnes of coal reserves at Moher (capacity of 402 mt), Chattrasal (150 mt) and Moher-Amlori Extension (198 mt), over an area of about 6,000 acres in and around the proposed power project.

Coal requirement
The Rs 18,300 crore Sasan project is scheduled to go on-stream with the first 660 mw unit of the 3,960 mw project to go on-line ahead of schedule within a few years. The ultra mega power project will require about 15 million tonnes of coal annually.

According to sources, Reliance Power was among the first to submit a coal development plan for captive coal blocks allocated in the past few years.

The Sasan project was awarded to Reliance Power in August 2007 and the coal development plan was developed and submitted within few months, said the official.

First of nine
In the case of some captive coal blocks allocated to power producers such as National Thermal Power Corporation, the development plan has not been submitted even after nearly five years, the sources said.

Sasan is the first of eight or nine such mega power projects planned in the country, and was scheduled to be fully commissioned by April 2016, with six 660 mw units planned.

However, Reliance Power is working to commission the project ahead of schedule by fast tracking the entire process, said the official.

Reliance Power currently has access to coal reserves of about one billion tonnes in India and abroad, including a coal mine in Indonesia, which it acquired recently.

In India, the company has access to another 150 million tonnes of coal, along with five others who were allocated mines in Orissa and Chattisgarh.

Reliance Power is setting up 13 projects with a total capacity of over 28,200 mw. Seven of them are coal fired projects. Coal will be imported for the Krishnapatanam and Shahanpur projects.

Posted by Srivatsan at 4:25 PM

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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.