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Sunday, July 26, 2020

KSE100: Week 30-2020 - Bears Make Some Hunter Beef!

KSE100 index took a dive after hitting its predicted critical resistance of 38300 +/- 300 and strong support stands at 36900 +/- 300. Major events across the week had been Ijara Sukuk auction on 23-Jul, PIB auction on 21-Jul, and MTB auction on 29-Jul. Together they represent a major liquidity drain from the equities market. Eid Al-Adha 2020 falling at the end of week 31-2020 represents another major cause of profit booking. So overall, we expect the index to continue its correction and may find stability near the end of week 31-2020 as dips are exploited by sharp investors as an opportunity to accumulate. Rollover week ahead will also add to index volatility which can lead to see-saw behavior intraday.  So looking forward we do not have much to say about the index so we wish you a very happy Eid Al-Adha 2020! 

Market capitalization remained strong for the entire week, keep itself afloat above the previous week's average. Despite profit-taking losses, the weekly average closed with a gain of +130.67 billion/PKR. Strong confidence in the market and a demonstration that dips were bought by investors waiting on sidelines for an opportunity.

Wednesday, July 22, 2020

KSE100: Week 30-2020 Mid Update

The index has been exhibiting whipsaws throughout the week perhaps due to bulls taking intraday breaks for a catwalk at Karachi cattle market. But upward momentum has once again begun to take strength, opportunist buyers are luring the bulls with fresh green grass (money).

Market capitalization is fluctuating in a narrow margin, with DoD figures prevailing above the previous week average so far, which is a good indication of bulls returning to strength. It's too early to slaughter them! 

Looking forward, we reiterate our views of the previous week to remain valid for this as well.

Friday, July 17, 2020

KSE100 - Week 29-2020 Closing Notes: Its Steak Season Ahead!

Bulls have been charging relentlessly at the KSE100 but it's only a short time before steak season hits head-on. The index has rallied after breaking above 33600 +/- 300 as we predicted in last so many of our posts. Now critical resistance of the index has been upped to 38300 +/- 300 which may coincide with the Eid Al-Adha - when thousand of bulls will be slaughtered for a religious festival. I can smell the tasty steaks already! 

Looking forward, we expect a pre-holiday profit-taking run at the critical resistance but international hajj being suspended this year also creates the probability of index remaining strong during the pre-holiday season. This is something that has never happened before, so the passage of time only will validate either view. Therefore, in a nutshell, we expect some correction to happen at critical resistance before deciding on the future move - up or down. The bulls definitely need some rest! 

Critical resistance is at 38300 +/- 300 and in event of correction support is expected at 36900 +/- 300. Breaking the critical resistance with considerable strength would lead the market toward pre-COVID19 levels. Expected to make a double top formation. 

The average weekly capitalization gain was +201.30 billion/PKR, highest WoW so far as compared to the last three weekly closings. This demonstrates strong and growing investor confidence. A positive sign indeed but with caution as the market enters the overheated territory. Happy trading! 

Wednesday, July 15, 2020

KSE100 - Week 29-2020 Mid Update: No Update Really!

View as per the previous post is reiterated and there is no change of stance so far. Major event today was MTB and PIB auction (MTB & PIB FRR Auction: Bid Pattern 15-Jul) which caused some intraday pressure in the market.

Market capitalization has continued to remain higher than the previous week's average. Despite auctions, the net DoD figure shows a gain of 8.44 billion/PKR. All roads lead to the bull race!

Friday, July 10, 2020

KSE100: Week 28-2020 Closing Notes - No Fear

Following up from our previous update, the index is now facing its mid-point resistance at 36300 +/-300 and despite attempts during intraday, it is still struggling to break out from here. We may see multiple rejections with choppy market for ahead for next few sessions. Game in on as per our prediction. Correction is also due in overbought sectors.  A clean break from this level is required for further upside and we expect the market will reach its pre-COVID19 levels as the next channel top of major trend.  

Looking forward, its business as usual. 

Capitalization remained strong throughout the week, with daily growth leading ahead of the outgoing weekly average. The last trading day of the week saw a gain of +7.03 billion/PKR while the weekly average gained +188.09 billion/PKR. 

Good luck and happy trading!

Thursday, July 9, 2020

KSE100: Week 28-2020 Mid Update

Update delayed due to power failure caused by rains in Karachi. 

KSE100 has continued to perform remarkably well, breaking above its resistance of 35100 +/- 100 with relative ease, affected only by mild intraday correction. So there is not much to update here other than reiterating our previous expectation about this rally to hit its midpoint at 36300 +/- 300 and then decide its course forward. Breaking the mid-point shall take the market up by leaps of several thousand points but the upcoming result season of Q2-2020 is likely to take its toll as the businesses have suffered the loss of sales and financial contraction due to lockdown. 

To get a good understanding on our historical point of view, please read the previous posts on this blog. 

Market capitalization has shown exponential gains with day to day growth hovering above the outgoing weekly average. Strongly positive sign indeed. 

Sunday, July 5, 2020

KSE-100: Week 27-2020 Closing Notes: Resilience in the Face of Adversity.

Our heartfelt condolences go out for the victims of the 29th June terrorist attack on the Pakistan Stock Exchange. The brave who defended and the martyrs who laid their lives in the line of duty. May their souls rest in peace.

Following up from our previous update, KSE100 has closed the week facing head-on rejection from its channel top of 35100 +/- 100 and has not formed a double-top. It will be interesting to observe its trajectory ahead in week 28. We expect the first scenario to be playing out. Volatility has remained high once again causing wild intraday swing - affirming our views on the exchange of hands between sector. 

Recomposition of KMI-30 w.e.f. 13th/July (link-1) is also expected to created skewed buying and selling pressure promoting further volatility. 

Market capitalization stayed the course of growth throughout the entire week with the weekly average gaining +148.15 billion/PKR. 

Thursday, July 2, 2020

KSE-100: Week 27-2020 Mid Update - Like a Rocket!

KSE-100 blasted past its intermediate resistance to close higher with all indicators in bullish momentum. We expect the climb to hit its channel top and result in two possible outcomes. 

Scenario 1: Correction shall be witnessed from the channel top, with the dip testing one of its previous resistance of 34700-34200 +/- 100 as support. Failing to honour this support may cause further break down. 

Scenario 2: Index will break past the channel top and hit its midpoint at 33600 +/- 300. A sustained break above 33600 +/- 300 is required to unleash major bullish momentum. Last time index broke through its midpoint in Sep-2019, it triggered a massive bull rally lasting 125 days and gaining 12500 points - a spectacular 40% rise in the index points.  We shall witness what it brings this time.

DoD market capitalization stands higher than the average of the outgoing week, representing renewed investor interest and growing money flow. Ban on institutional investment into NSS schemes (Institutional investment in savings schemes banned) is positive for raising money flow into the equity market. As at least part of the money retired from NSS may find its way into equities over mid to long term.