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Monday, December 27, 2021

KSE 100 Week 50 & 51 Data & Technical Analysis

Technically speaking, 42800 +/- 300 is proving to be a firmly held bottom but overall bears refuse to surface. The major trend remains side ways, with some short term spikes expected. 

The last two weeks closed with positive weekly average capitalization which shows some promise of recovery ahead. Much depends on the next monetary policy. If bond yields began to stabilize, it could signal the end of a policy rate hike. Until then, we can only expect short-term spikes or sideways bourse. 


Sunday, December 12, 2021

KSE100 Week 49-2021 : Bears Gotta Stay!

Persistent failures to address economic woes and rapid erosion of political trust have rapidly receded the bourse with economic discourse once again leading to a rentier economy of high-interest rates. Only a miracle or surprise interest rate cut can save the bourse otherwise bears gotta stay! 

Monday, December 6, 2021

KSE100 Week 48-2021: Total Meltdown!

 The week started off with the COVID-19 Omicron variant washing global markets into deep red, causing the index to briefly hit its second major support at 42800 +/- 300. Given the force majeure situation, no technical or fundamental reaction is expected at the bourse. Looking forward, instability is expected to prevail until global stability begins to take shape. Further development at the bourse will depend on the next policy rate announcement. 

Another cause of major concern is the steep hike in Pakistan's bond yields. There has been a sharp almost-vertical hike causing major concerns on a further hike of interest rate. Which may prove devastating for the stock market. Average weekly capitalization once again fell in the red, wiping out any gains hoped at the start of the week.  Events that may impact the bourse are Ijara Sukuk auction on 9-Dec. 

Sunday, November 28, 2021

KSE100 Week 47-2021: A Stab in the Back!

 After the software failure woes of Jul-Oct, now comes another bleeding session to PSX. This time a gaping wound of an interest rate hike. While a rate hike was well expected due to overheating economy, the jumping increase of 150 bps has jolted the investors out of their seats. At times it feels the steering wheel of policymaking is broken causing the economic vehicle to steer erratically from side to side. Overall the decision of such a steep hike feels like a disaster as it will negatively impact a wide spectrum of economic activities and may not yield any sizeable benefits to cut down inflation. On the global front, another rapidly spreading variant of COVID-19 named "Omicron" has sent the government into panic lockdown and dashed the hopes of economic recovery and early policy rate hikes. 

Looking forward to PSX, a double bottom has been observed at 43800 +/- 300, bourse remains unstable in the light of ever-changing economic tides, economic disturbances, uncertainty, and political instability. In the light of global events and economic distress prevalent in the country, we can only hope that the policy rate hike may be a temporary decision - albeit a short-sighted one. Although the economic history of the country tells us that rates once gone up rarely come down again. Another concerning event is the rejection by IMF on the $6 billion bailout program. Although not directly related to the PSX, such events do create pressure on the USD/PKR currency relationship. 

Looking forward, we market turbulence to exist in foreseeable future keeping it unpredictable and nerve-wracking. 

Saturday, November 20, 2021

KSE100 Week 46-2021 Closing Notes

The index has carved a new bottom at 43000 +/- 300 and a pivot at 45800 +/- 100. These levels are higher highs indicating a potential of the index reaching a new high for its final rally. The chart below still indicates the same old levels but after a confirmation during the week ahead, it will be updated. A potential downside risk is a speculation on the SBP policy rate hike. However, the mixed signals from global markets and the resurgence of COVID may alter the course. The majority of expectations are towards a hike or stability. It would be really surprising if the rate is cut instead. A major disappointment has come into the market after the failed software rollout and investment confidence is badly hurt, which is portrayed in the slow recovery of the bourse as an investor remains cautious after a traumatizing experience. Looking forward, we expect recovery to continue. Dips can be buying opportunity, the bourse direction hangs in a balance with bulls and bears exerting an equal force. The week ahead is an interesting one indeed. 

Weekly average capitalization once again closed in the red but with lower losses as compared to the previous week. The trend towards the end of the week has witnessed growth. There are no financial market events in the week ahead - a positive trigger for equities. 

Monday, November 15, 2021

KSE100 Week 45-2021 Closing Notes

After three weeks of winning streak, another break strike comes to the bourse as it hit the critical resistance of 47000 +/- 300 but at least this was in the naturally expected momentum of the market. Much needed pivotal support lies at 45100 +/- 100 which will bring the bulls back into action but the field is already conquered by the bear now. Further S/R zones are marked on the chart below. 

On the fundamental side, the rocky road with the IMF package has led to the destabilization of PKR vs USD setting off shockwaves of panic resulting in a meltdown of investor confidence once again. But looking at the week ahead, there is light at the end of the tunnel with Saudi deposits materializing and IMF negotiations progressing. Looking forward, the rocky ride remains the fate of PSX, and being prepared for disappointment will dampen its effect. Policy rate announcements remain another threat to the bourse where any hike in interest rate may set off a wave of selling. 

Critical benchmark of 8000+ Bn/PKR once again turned into a sell-off with the week closing at a net loss. The force is strong at this level! Events that may negatively influence the bourse is MTB auction on 17-Nov, 2021. If you enjoyed reading this update, do let us know in the comments below. 

Sunday, November 7, 2021

KSE 100 Week 44-2021 Closing Notes

 This is a delayed update due to bad health. So only data will be presented while the stance is carried forward from the last week.

Market capitalization once again climbed upwards and crossed the 8000+ Bn/PKR benchmark. The upward trajectory is likely to carry on if there is no negative influence over the bourse. The expected risk may be from the expected monetary policy due soon. Events that may influence are Ijara Sukuk auctions on 11-Nov. 

Monday, November 1, 2021

Week 43-2021: Closing Notes

In line with our expectations, the bourse has resumed its bullish trajectory and is likely to continue for the next few weeks. Major support and resistance levels are marked on the chart below. In a major setback, PSX has reverted back to the old trading system, relieving the participants from many unexpected losses and mental stress. Poor management and lack of sufficient procedures create a very nervous situation for investors. Looking forward, the strategy remains to buy the dip. 

Market capitalization growth was less than ideal but the week still closed with net gains. It is headed once again towards its benchmark resistance between 8200 - 8400 Billion. 

Sunday, October 24, 2021

KSE100 Week 42-2021 : Weekly Closing Notes


Bears are finally receding to hibernation but still have the potential of dips for soft correction. Major support and resistance levels are marked on the chart below. There is not much to speculate but global concerns of inflation may exert a negative influence on the mood as increased inflation may call in for internet rate hike. Strategy for the week ahead, wait and watch. 

After persistent losses, another weekly gain in average capitalization is observed. We expect the momentum to continue in the future. Events that may influence the bourse are the PIB auction on 27-Oct. 

Monday, October 18, 2021

KSE100 Week 41-2021: Closing Notes

 A new bottom discovery has been observed and the performance over the next week will determine if it is to hold or not. Weekly average market capitalization once again closed with a whopping loss but the last two days of trading have shown a hopeful recovery. Looking forward, the week ahead holds a lot of weight to determine the market future. But something can be said with confidence, the bulls had a beating of their lifetime. But now the bears are tired and may go into their winter hibernation. 

Events that may affect the bourse is MTB auction on 20-Oct.

Sunday, October 10, 2021

KSE 100 - Week 40-2021 : Weekly Roundup & Uncertanity!

 Uncertainty remained at the bourse and there is nothing much to update. Weekly capitalization closed again after several weeks of hefty losses. With only twelve weeks to go for annual closing, the market has shown no signs of respite since July. On the fundamental front, the situation is likely to remain unpredictable as long as chaos persists in Afghanistan. Cental bank announcement to curb USD outflow should provide some support to PKR. If PKR devaluation is curtailed then we may see the outflow reverse and recovery possible in PSX. Overall, PSX has become an unattractive investment under the current government despite making tax reforms and reducing CGT, the bourse has failed to sustain above its benchmark of 8000+ Bn/PKR. There are no money market events (MTB, PIB & Sukuk auctions) that may impact the market in the week ahead,