Tata Motors has set up a separate team at its plant in Pune to examine ways to cut manufacturing costs on the Nano, the small car scheduled for an October launch, to bring the ex-showroom price down to the psychological Rs 1 lakh mark, Managing Director Ravi Kant said today.
At present, the Nano’s ex-factory price is Rs 1 lakh, making it the world’s cheapest car. Transport costs and value-added tax, however, put the ex-showroom price at Rs 1.2 lakh to Rs 1.3 lakh.
Kant declined to elaborate how the price reductions would be effected. Experts believe the company will either look at better price negotiations with component suppliers or through very minor re-engineering on the basic model.
Tata Motors has been able to reduce the cost of the car by making things smaller and lighter, doing away with superficial parts and changing material wherever possible.
For instance, the 623 cc petrol engine was made of aluminium instead of cast iron, saving weight and cost. The engine has also been placed at the rear of the car, putting less pressure on steering systems.
“We haven't taken a call on any price cut on the Nano, the launch date of the car is still far away and something might be planned by then,” a company official said.
Kant said the company had received lakhs of enquiries through the internet for the Nano. “The response has been overwhelming so far.”
The surge in pre-launch demand had prompted Chairman Ratan Tata to state that the company is open to licensing the Nano design to other automakers for manufacturing.
This move by the company, analyst believe, will help Tata Motors achieve economies of scale, thereby reducing the time lag of delivery of the car.
Tata Motors intends to open bookings for the car three months from now.
The company plans to produce 2,50,000 Nanos in the first phase and add 1,00,000 in the second phase, taking production capacity to 3,50,000 cars probably by the end of the next financial year.
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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