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Monday, August 10, 2020

KSE100: Week 32-2020 Closing Notes

There is no week 32-2020 mid update as there was no significant information needing to be updated. 

KSE100 begins to show signs of exhaustion as it approaches its second critical resistance of 40700 +/- 200 but managed to close the week above 40000 points. Mild profit-taking was observed during Friday second-half, probably accelerated by a heavy downpour which caused brokers and day traders to liquidate their positions early and rush to homes. 

Looking forward, we reiterate our view as per the previous post and expect the uptrend to continue with the usual phase of correction at major resistance and a possibility of strong reversal at the pivot. An exchange of hands between the sector may trigger a see-saw behaviour once again. 

Sector-wise, cements & pharma appear to be upside saturated while autos still have fuel to go. After all, the auto-sector is a prime beneficiary of a lower interest rate. OEP, Banking, Insurance & Fertilizer appear to be in their initial accumulation phase. 

Support: 38300 +/- 200
Pivot: 39300 +/- 200
Resistance: 40700 +/- 200

Daily market capitalization successfully floated above the outgoing weekly average for the entire trading week despite moderate profit-taking being observed.  The weekly average closed at a gain of +163.59 billion PKR. This means investor confidence has continued to grow week over week with dips being absorbed by fresh buyers. As mentioned in the previous post, we expect the market to comfortably grow towards 8000+ billion/PKR capitalization which has been its pre-pandemic average but also a saturation point before triggering major trend change. 

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