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Sunday, September 8, 2019

Update: September 08, 2019

KSE100: MoM index had a good start from EMA125 (29500) support and maintaining a green candle with very small lower shadow. Critical resistance is monthly DMA10 (31170). Breaking this resistance could give way to closing above monthly EMA100 which is a strong reversal sign. 

Specific risk factors are worsening financial situation, risk of further currency devaluation. Potential renegotiation or failure of IMF program. Two T-bill auctions on 11 & 25 Sep and one PIB auction on 18-Sep.  These auctions usually cause liquidity drain from the market as investors run a sell-off in equities and shift their capital to risk-free interest-bearing instruments. Sector specific risk are imposition of heavy penalties by SBP on ten major banks which has potential to destabilize entire index. Negotiation failures between FBR and traders to documents trading business. Auto sector tiff with Ministry of Climate change over electric car policies. 

Positive side development includes government initiative to enable murahaba based sharia compliant financing, attract more foreign capital with tax simplifications and undertake reforms for ease doing business in equities market. MoM basis for SEP as per REG market data, mutual fund, foreign corporate, brokers and insurance companies have remained major sellers while Individual and other organization were major buyers. Foreign individual, overseas Pakistani and Banks were minority buyers. Overall, index seems to have entered consolidation phase. 

Minding above picture in wider context, index may post strength in short term, but weakness persist in mid to long term. Facing strong rejection at monthly DMA10 (31170) or failing to hold support at monthly EMA125 could drop the index to next support of EMA150 (27050). There is a real risk of index being exposed to its absolute bottom between EMA175 and EMA200.  We estimate this figure to fall between 25000-24000 points. 

Thursday, September 5, 2019

KSE 100 Update: Thursday, September 5, 2019

KSE100: As predicted in our 4th Sep briefing, EMA21 was decisive point. After failing to sustain a breakthrough, bear made a powerful counter strike. 30,350 was intraday support which got shot down quickly by bears. 

Looking forward, on monthly chart duration we expect index to test EMA125 (29500 – 29350) once again and failing to hold will expose serious downside. With RSI standing at its lowest, bears do not have much space left. Strategy should be cover shorts at opportunity and start short listing fundamentally strong scrip for long positions.  Index behavior at EMA125 will be decision maker. 

Wednesday, September 4, 2019

KSE100: Wednesday, September 4, 2019

By: Stock Master
KSE100: Market had key support at 29500 which got overlooked due to continuous falling with low volume in two previous days. After flip-flop a few times, support was honored as bears failed to break, and market made a 500+ points rally with KSE100 volume hitting 107M. The choppy action served plenty of warning and short were covered in time before major damage could be inflicted. For upcoming season, we look forward to market reaction at EMA21. Poor cement sales numbers and long weekend (9&10 Sep) for Ashura holidays means market is not expected to build any solid momentum.

Monday, September 2, 2019

Update: Monday, September 2, 2019

By: Stock Master
KSE100: We expect market to maintain its downtrend and find support at 29000-28500 which should also be a target for short covering.
However, recent news about update of SECP rules to support market liquidity may yield a slight positive spike temporarily but rest assured, bears will return. Looking at the big picture overall, there is still massive selling pressure coming from mutual funds and insurance companies.
Looking at monthly statistics of August for REG market, mutual funds and insurance companies were dominant sellers while individual were dominant buyers. In FUT market, mutual funds and broker were dominant sellers and individual was dominant buyer.
We are witnessing a change of trend in market players as institutions are exiting and being taken over by individuals. This shows that market is entering an attractive valuation phase where high net worth individuals are investing heavily.