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Sunday, August 1, 2021

KSE 100 Week 30-2021: COVID Returns?

The week saw a range-bound performance in line with our expectation due to a multitude of factors but observed support at 47000 +/- 300 which was previously major resistance now acting as support. Honoring this level will keep the bourse in the accumulation phase followed by a recovery. All support and resistance levels are marked on the chart below. 

Looking forward, the bourse appears to be consolidating for the next upside on purely technical grounds but the uncertainty of COVID panic may very well push it to the other side. Observe with caution and avoid hasty trading is our word of advice. We expect the period between mid-Aug to mid-Sep as the prime point to sell-off. 

A major event that marked the outgoing month is the introduction of 60 & 90 days futures in accordance with international practices. This will help dampen the short-term volatility by a moderate margin and provide wider swings in the 90-120 days trading time frame. It's a win-win situation for those who understand investing with patience. Availability of a longer duration future will also take away the stress in taking a short position but at a cost of imposing higher margin requirements v.s 30 days future. Overall, we give a positive rating to this step initially but its long-term impact will only be visible in the next few months. 

Average weekly capitalization eroded all gains made during the earlier week to effectively close flat. It may be attributed to hasty profit-taking during the second half on Friday triggered by news of lockdown enforced in Karachi. 

Good luck with your trading and if you enjoyed reading this update, do let us know in the comments below. 

Tuesday, July 27, 2021

KSE 100 - Week 29-2021 Closing Notes

 Initially, we planned to have no blog update as only two trading days in the week with no significant move to notice. However, eventually out of habit here is a belated updated. We expect an unstable market ahead due to roll over a week. Major support and resistance are marked below. The strategy is to accumulate on the dip. 

Despite the poor market performance, capitalization is sustaining well above the benchmark. This could be the calm before the storm. And a reward is waiting for those patiently holding positions for break out. Monetary policy is expected on 27-July and MTB auction on 28-Jul which means an indecisive week overall.

Monday, July 19, 2021

KSE100 Week 28-2021 & Happy Eid Al-Adha 1422

We wish our followers a very happy Eid Al-Adha 1442. 

Looking at the bourse, another re-test of pivotal resistance at 48100 +/- 100 is expected, and with holidays ahead not much can be said. Looking forward, August futures will open with an addition of 60 and 90 days contracts which should smoothen the short-term volatility and provide more long-term swings. Overall, we remain upbeat on the market with a buy-on dip strategy. All major support and resistance levels are marked on the chart below. 

Average weekly capitalization remained flat and closed at a negligible loss. We attribute this behavior to holiday-oriented profit-taking. The week ahead has much of its trading days off. 

We wish you enjoy your holidays and let us know your feedback in the comments section below. Happy holidays! 

Monday, July 12, 2021

KSE100: Week 27-2021 Update.

 The pivotal rejection came to play once again and we may see some more see-saw ahead with dip presenting a buying opportunity. Major levels are marked on the chart below. Small to mid-cap remain under focus and the expected outlook is see-saw behavior in the short term. The pivot has been lowered to 48100 +/- 100. 

Average weekly market cap is struggling in a narrow range but after two weeks of losing, it finally closed in the positive. Events that may influence the equities are MTB auctions on 14-Jul. 

Sunday, July 4, 2021

KSE 100 Week 26-2021 Closing Notes

A perfect honoring of 47000 +/- 300 was observed which was previous resistance acting as support. 48200 +/- 100 remains pivotal resistance to be re-tested for the second time. The overall strategy remains swing trade with buy on the dip. All levels are marked on the chart below, for better understanding read the previous updates. 

Although the average weekly capitalization once again closed at a loss, the trend is sustaining itself above the benchmark barely by a thread. This keeps the situation hopeful with some common-sense measures. [Edit] In the money market there is PIB auction on 7-Jul. 

Monday, June 28, 2021

KSE100 Week 25-2021 Closing Notes

 Due to exams, will not be active for the current and next week 

A stance remains valid as per the previous week's update and the capitalization data is updated below. 

Events that may impact the equities market are MTB auction on 28 June. 

Sunday, June 20, 2021

KSE 100 Week 24-2021 : Post Budget Fizzle Out!

Not much enthusiastic reaction to post-budget fervor. A boundary rejection from 49000 +/ - 300 means that 48200 +/- 100 shall act as pivotal support to keep bulls in momentum (previous resistance now acting as support). The stance from last week is reiterated with a special focus on small to mid-caps. For important support and resistance levels, refer to the chart below.

On the fundamental front, induction of new DFC contracts with 60 and 90 days expiry will have an impact on volatility. Currently, we assess the situation as stabilization in the short term but increased volatility in the long term - a benefit to those who play their cards right. Refer to the official PSX document for detailed information. 

Market capitalization is sustaining above its critical resistance but the delta is shrinking razor thin. This may create a pattern of sharp upward breakout followed by a correction cycle. Taking its advantage to sell on strength and retire to cash. 

Sunday, June 13, 2021

KSE 100 Week 23-2021: Post Budget Expectations?

Bourse remained unstable throughout as per our expectations and weekly closing failed to break the pivotal resistance at 48200 +/ 100. Therefore, the index is actually sitting on the edge with no clear decision. This could signal a lazy start of the week ahead followed by recovery. The strategy is to take advantage of the dip and keep a special focus on mid to small-cap stocks for the trading session between mid-June to mid-July. Support and resistance are marked on the chart below. 

Weekly capitalization of KSE-100 hangs in balance with stubborn resistance at 8300+ Bn/PKR once again and this remains the fear spot. On the fundamental side, measures to boost capital markets with tax reduction in the budget FY 21-22 are a positive catalyst and we look forward to observing the impact. The budget appears positive for rolled steel, cement, small auto, EV, and power generation. 

Events that may influence the bourse during the week ahead is the MTB auction on 16-Jun. 

If you enjoyed reading this update, please let us know in the comment section below. 

Sunday, June 6, 2021

KSE100 Week 22-2021: Caution - Speed Breaker Ahead!

The bourse has rallied but is demonstrating stubborn pivotal resistance at 48200 +/- 100 - we do not see this as a good omen. It could be the need for bulls to take a resting spot. Looking forward, the strategy shall be to take advantage of the dips and protect your profits! The week ahead may be an interesting one. 

Market capitalization has once again crossed the benchmark and approaching its dangerous territory at 8300 Bn/PKR - an exhaustion point that has always been the death spot for bulls. Will there be a breakout this time? what are the bulls gonna do? how will the market react? Are the bulls cornered once again? Suspense?? - bring it on! 

Sunday, May 30, 2021

KSE100 Week 21-2021: Hoorah over 47K!!

Week successfully closed above 47000+/-300, our indicated critical resistance level. The mid-May to mid-June bullish rally has been very well honored. The bulls are ready to charge with plenty of space but slow on motivation. We may see short-term exhaustion as bulls sit down for a rest before they can begin charging again. All major support and resistance levels are marked on the chart below. 

Market capitalization once again crossed over the benchmark 8000 Bn/PKR which has always been a point of cheers and caution at the same time. While the indicators are much more favorable towards a breakout in the long term, we remain conservative in the short term. Money market events that may impact the equities are PIB auctions on 2-Jun, 9-Jun, and MTB auctions on 2-Jun, 16-Jun, and 30-Jun with some, particularly heavy targets. Fears of interest rate hikes have been allayed as the central bank decided to keep it unchanged. 

Looking forward, the strategy shall be taking profits on strength and wait for a suitable dip during the early weeks of June. In line with our stance mentioned in the previous post. 

For anyone wondering, yes we have made the posting style much more concise and eliminated unnecessary repeats of information typically covered in brokerage bulletins. If you enjoyed reading this update, do let us know in the comments section below. 

Monday, May 24, 2021

Week 20-2021: An Update After a Long Time

 Long Eid holidays, academic assignments, and health issues together make a recipe for keeping one extraordinary busy. But once again, here we are with the latest outlook on the bourse for next week. There is no need to re-write the obvious and we cut the red tape and land directly on the topic. Catch up from our several past updates, the rally is on perfectly in the mid of May-June 2021 - well played! 

Looking at the market capitalization, recovery is evident during the post-holidays trading week, the linear trend line is well above the horizontal resistance at 8000 Bn/PKR and we expect a stiff resistance once again around 8300+ Bn/PKR - a level where the index has always struggle to cross. 

Money market events that may impact the equities bourse are OMO maturity on 28th-May, there is no PIB and MTB auction.

Looking forward we expect the healthy trend to continue and the strategy shall be buying low and selling high. It doesn't get more simple than that! If you enjoyed reading his update, do let us know in the comments section below.