Even as the government has notified the ban on cement exports with effect from Friday, steel producers today said the ban will not be effective in containing the price rise, given the fact that cement exports account for only 3 per cent of domestic production. Industry added the move would deter it from enhancing capacity.
"Exports of cement constitute only 3 per cent of production and 90 per cent of the exports are from companies located around the Gujarat coastal area. Most of these companies are small and mainly export to South Africa and Sri Lanka, as is obvious from their location and country focus. Therefore, the steps taken by the government on banning cement exports would not be effective to contain the price rise," a Confederation of Indian Industry release said.
CII called on the government to consider reducing the excise duty of cement, a move that it said would help in controlling prices.
Separately, the Indian Steel Alliance today appealed to Prime Minister Manmohan Singh to take into account the negative consequences of banning exports of cement and steel. "The total percentage of exports of steel at the moment are not more than 6-8 per cent of total production. Would a total ban on the export of steel make it available at significant quantities within the country to ease inflation pressures", president Moosa Raza said.
The export ban ban comes after cement companies increased prices of the commodity by Rs 5 per 50 kg bag earlier this month. In the period between April 2007 and February 2008, cement exports stood at 3.33 million tonnes, down 38.78 per cent over the corresponding period of 2006-07 on account of higher price realisation in the domestic market.
Meanwhile, Commerce Minister Kamal Nath today clarified that the ban will not be effective on deemed exports made to EoU's and SEZ's. “We will issue a corrigendum in this regard,” Nath said at a meeting organised here by the Federation of Indian Chambers of Commerce and Industry. As per current norms, supplies to SEZ's and EoUs are considered deemed exports.
Nath also added the Cabinet Committee on Prices will meet next week to take stock of the price situation. The wholesale price index based inflation rose to a three and a half year high of 7.41 per cent for the week ended March 29.
“We have banned exports of cements. The Steel Ministry is considering many steps to bring down prices in the sector. The message is clear that the government is ready to take whatever steps required to control prices,” Nath said today at the sidelines of a CII seminar on the annual supplement to the Foreign Trade Policy 2004-09.
Sources added the CCP may meet as early as Tuesday and consider measures like banning export of steel and steel products, levying ad-valorem duty on iron ore exports and bringing down excise duty on steel to 8 per cent from the current level of 14 per cent.
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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