Tata Steel has posted a 34.21% increase in consolidated net profit at Rs 1,416 crore for the third quarter ended December 31, 2007 after the acquisition of Corus early last year.
The Tata Steel scrip today declined over 6% to Rs 766 on the BSE today as results were below market expectations. Trade analysts, however, expect better performance in the coming quarters led by price increases.
Excluding turnover of Tata Steel UK of Rs 23,867 crore for the quarter, turnover registered an increase of Rs 2,157 crore. The increase was mainly due to increases in Tata Steel’s Indian operations driven by increase in prices. The increase in NatSteel and Tata Steel Thailand’s operations were attributed to price rise and increase in volumes.
The material cost, excluding Tata Steel UK of Rs 11,253 crore, increased from Rs 1,919 crore to Rs 3,003 crore. While increase in volume of operations as well as increase in prices of inputs (scrap) consumed by NatSteel resulted in an increase of Rs 887 crore, Tata Steel Thailand contributed Rs 226 crore to increase on account of increase in volumes. Increase in NatSteel group was also due to increase in purchases of raw materials by TS Resources Australia for use by Tata Steel India.
The interest charges (net) were Rs 1,081 crore. Other than interest charge of Rs 606 crore of Tata Steel UK, remaining increase was mainly due to increase in borrowings to fund acquisition cost of Corus.
Due to rupee appreciation against major foreign currencies, the company had a net exchange gain of Rs 45 crore.
The actuarial gain on funds for employee benefits amounts to Rs 145 crore for the quarter ended December 31, 2007. The gain represents reduction in pension liability arising out of higher discount rate reflecting improved yields on bonds.
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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