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Monday, March 10, 2008

Videocon lines up Rs 6,000 cr for GSM services, plans May launch

Ropes in former Alcatel-Lucent chief Ravi Sharma to head venture.

Consumer durables major Videocon Industries has firmed up its telecom plans and is making an initial investment of Rs 6,000 crore for rolling out GSM services, notwithstanding spectrum and legal issues besieging the sector.

The services will be launched through its subsidiary, Datacom Solutions, by May. In case of a delay in spectrum allocation, the company may opt for taking spectrum on lease.

In another important move, the company has roped in former Alcatel-Lucent president and managing director (India and South Asia) Ravi Sharma to head its telecom operations.

This is the first instance of the head of a global telecom infrastructure major moving over to a service provider. However, this could become a trend as others in a situation of talent crunch will follow suit.

Videocon Chairman and Managing Director Venugopal Dhoot confirmed the development, “We are making an initial investment of Rs 6,000 crore to kick-start the services across all the 23 circles in the country. The investment would be made immediately and we would look at increasing capital expenditure depending on growth.”

The Rs 6,000-crore investment would be made immediately to roll out the services, while the company has completed all technical formalities and is awaiting spectrum allocation.

“We don’t think the spectrum allocation would be delayed as start-up spectrum is available in many circles. Moreover, spectrum is also lying unused that will be offered to new entrants,” Dhoot said.

In the worst case of spectrum allocation being delayed, Datacom Solutions would take spectrum and infrastructure on lease from the existing players.

Datacom would rope in over 4 crore subscribers in the next five years and expected to break even in the next couple of years, he added.

The department of telecommunications (DoT) is planning to allocate spectrum in four circles – Andhra Pradesh, Kerala, Orissa and Tamil Nadu (including Chennai) – to new licensees.

The move comes after the wireless planning and co-ordination (WPC) cell of DoT has identified 4.4 MHz spectrum under the 1,800 MHz band lying vacant in these 4 circles. This was expected to benefit nine new entrants, including Datacom Solutions.

Although renting out spectrum is not permitted under the existing telecom policy, DoT is looking at this option to enable new players commence operations.

Datacom Solutions has been awarded Universal Access Service Licence (UASL) that permits commencing telecom operations in all the 23 circles. The company is also leading the queue for spectrum allocation in these circles, except Mumbai and Delhi, where it is in the second position.

Dhoot also said that the company had completed all the technical formalities for the rollout. However, the company has neither engaged any handset manufacturer nor plans to manufacture handsets. Subscribers have been given the freedom to opt for handsets from the market.

Besides engaging Ravi Sharma as chief executive officer of Datacom Solutions, the company has appointed around 200 administrative staff for the rollout.

Alcatel-Lucent has recently rejigged India and South Asian operations by elevating Sharma as advisor to Frederic Rose, the president of Alcatel-Lucent’s Europe, Africa and Asia business. The company had appointed Vivek Mohan in his place.

Posted by Srivatsan at 4:11 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.