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Sunday, September 20, 2020

KSE100 - Week 38-2020 Closing Notes: A See-Saw Week


KSE100  remained volatile and indecisive through out the week with cyclical showing strong trend of profit booking. While index briefly dipped below its pivot during the trading week, it has sustained closing above its pivot which lends some credence to upcoming minor recovery in the index with top side target of 43000 +/- 300. The recovery is likely to be led by bank, OEP and fertilizer sectors. And as we have reminded over and over, one must focus on the scrip and not the index because index can be misleading depending on which sector is leading the index growth. A parabolic pattern was also observed developing during the last few trading session. This has multiple interpretations but a common expectation is making a new high before collapsing for correction. Looking forward, we reiterate our stance of profit booking and hunting for stocks which are still at bottom and are likely to perform against the index. 

Looking as market capitalization we observe a sharp drop between Sep-14 and Sep-16 as compared to the outgoing week-37 average. However, a gradual recovery is observed from Sep-17 onward and the weekly average shows a gain of +13.13 Billion/PKR. A major financial event on Sep-16 was State Bank PIB auction, which has under performed (link-1). Upcoming major financial event which can impact stock market is MTB auction of 450Bn on 23-Sep. For complete calendar of PIB, MTB and Sukuk auction calender, visit here.

Monday, September 14, 2020

KSE 100 - Week 37-2020 Closing Notes: Saturation Ahead

KSE100 rallied during the week gaining +507 points WoW and closed at 42530 points. Weekly closing remained negative under profit-taking pressure yet the index sustained it with volatile sessions and not losing much. Signs of exhaustion have started to appear with cyclical starting to shape their corrective dip while low cap items have begun to rally. 

Speaking about technicals, the index had honored its support at 41900 +/-200 and unleashed an upward rally but ran into resistance at its pivot. KSE100 will remain in the bullish territory as long as it floats above its pivot of 42450 +/- 200. Breaking below the pivot may bring substantial selling and a new support zone between 41200-41600 may be created. On the upside 43000+/-300  remains the critical top. We don't expect any immediate breakthrough and forecast late Oct to early Nov 2020 as correction period before a new trend direction is cast in. But remain hopeful on the resumption of upward trajectory post-correction.

All technical levels are on a closing basis. 

Despite the negative index due to correction, the market capitalization kept growing for the entire week and on Sept 10, it also crossed the 8000 Billion/PKR benchmark. Saturation is likely to take hold from here on and profit-taking is highly recommended. The weekly average settled at a gain of +156.34 Billion/PKR. 

Sunday, September 6, 2020

KSE100: Week 36-2020 Closing Notes: Perfection is Satisfaction!

Following up from our previous update, index perfectly honoured our prediction. Staying within the pivot zone during the correction, honouring the lower band of pivot range and then bulls got charging at full speed taking the index towards crossing the 41900 +/- 200 benchmark, gaining +967 points (+2.4%) WoW to close at 42,023 points. While the last trading the week saw some correction - expected as it happens after crossing any critical resistance followed by a choppy second session due to panic trigger of rain starting again. Memories of recent urban flooding are still fresh to cause this kind of behaviour trigger - nothing unusual. 

Looking forward, we may see a weak start on Monday, 7th Sep followed by a recovery in a later day. 41900 +/- 200 shall act as strong support while upside target remains the pre-COVID19 level of 43000 +/- 300 initially. We always keep the worst possible scenario in mind under all situations. 

PM Imran Khan visit to Karachi and announcement of Karachi transformation plan may act as a positive trigger (PM Imran unveils Rs1,100bn development plan for Karachi)

Major financial events in the week ahead with possible impact on the stock market is MTB auction on 9th-Sep. 

Market capitalization remained strong throughout the week, with the weekly average closing at a gain of +248.53 billion/PKR. The highest reported in the last four week and signals s strong start of September month. Money flow into the market will further improve as Roshan Digital banks account take off with investment flowing in from abroad.