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Monday, November 30, 2020

KSE100: Week 48 Closing Notes and Outlook for Week 49 (2020)

To start off, index closed WoW basis in neutral territory with literally 0.00% gains.  The lower pivot zone is proving to be a multi tested supply zone and recovery is observed from this point with surging volumes. The technical levels are updated as index carved a new pivot zone around 41200 and still needs to cross 41900 +/- 200 to be in major bullish zone.  

So did our pessimism on the index paid off? Absolutely, as the entire week gains failed to sustain on the last trading day due to aggressive profit booking. We retain our pessimistic view until a clean break above 41900 +/- 200 is observed. Looking forward, the range bound movement is expected to break on the upside if 40700+/-200 continue to hold as support. 

Weekly average capitalization demonstrated a positive trend across the trading week, baring the last day where slight profit booking is observed. The last trading day closed higher as compared to previous week average but WoW average is down by -11.03 billion/PKR which is to be regarded as very small loss. The rising capitalization represents investor interest to absorb the dips as accumulation opportunity. 

Edit 3-Dec: Events which may influence the capital markets are PIB auction on 02, 09, 16, 30 Dec. MTB auction on 02, 16, 30 Dec and Ijara Sukuk auction on 03-Dec. 

Sunday, November 22, 2020

KSE100: Week 47 Closing Notes and Outlook for Week 48 (2020)

 A quick recap of outgoing week. We had expected a swift test of pivot upper boundary at 40000 points followed by recovery. Practically, index has remained sideways for the week followed by a melt down in the last trading session. The re-test of 40000 never reached and we can say the index rather stayed in slow motion. There is no clock and calendar at the bourse. Weekly closing was at a net loss of -382 points (-0.94%).

A number of events and political noise may have kept the interest low at the bourse but provided an opportunist dip for value hunters. 

Looking forward to week 48-2020, the possibility to retest 40000 on closing basis remains open. So a negative start of the week is expected and could remain another dull week. Monetary policy announcement due on Monday 23-Nov is a potentially positive trigger but it is counter balanced by roll over week. As hike of interest rate in Turkey has set speculation that Pakistan may follow suit. (Source:Bloomberg) but economic indicators hint towards an unchanged policy and any increase cannot be afforded. In plain sight, we have a pessimistic view. 

The last trading session of the week observed significant profit taking and weekly average capitalization has fizzled, wiping out the gains of outgoing week to close in a net loss of -77.62 billion/PKR. Not a significant number as observed during bearish rallies but the onset during the early phase of recovery is disappointment. 

Saturday, November 14, 2020

KSE100: Week-46 Closing Notes and Outlook for Week-47 (2020)

Weekly closing observed a loss of -162 points (-0.40%) with intra-sector exchange of hands across the entire week. The last trading day of the week closed with dragon fly doji formation in downtrend. Although we are not firm believers of candle sticks, they usually demonstrate a predictable behavior. A typical reaction of market to dragonfly doji is a dip in the next session followed by recovery. And the possibility remains open to test the upper boundary of pivot zone at 40000 points. Therefore, our outlook on the week ahead is clear. We may see a dull start, a retest of 40000 and then recovery at week closing. 

Market capitalization recovered in the early days of the week but end of the week trading shows significant profit taking. However, the weekly average closed with a gain of +57.55 billion/PKR which hints towards investors absorbing the dip. Events which may influence the equity markets are MTB and PIB auctions due on 18-Nov.

Monday, November 9, 2020

KSE100: Week 45 Closing Notes and Week 46 Outlook (2020)

KSE100 opened the week with rocket trajectory, gaining +843 points (2.1%) on weekly closing basis. The last trading day saw the bulls take rest at 40700 +/- 200 which was previous resistance now acting as support. Things going well in accordance with our predictions. Looking forward, the bulls still need to cross the hurdle of 41900 +/- 200 to confirm their further rally. On the downside, failing to hold 40700 +/- 200 as support level may see a short term dip towards the pivot. If index makes a continuously lower support then gradual shift of trend to bearish will be confirmed. To keep worst possible scenario in mind, the floor currently sits at 36800-37500.

Market capitalization demonstrated a remarkable recovery after a massive loss on first day of the trading week but weekly average remains net negative at a higher proportion than previous week. Much of it has been contributed by the impact of profit taking on last trading day. The proportionally higher loss of capitalization is a cause of concern and demonstrates potential weakness.  

Events which could influence the equity markets are PIB auction on 11-Nov, and Ijara Sukuk auction on 12-Nov. For full details of auction schedule, please check the auction calendar here. The multitude of auctions in a sequence could exert considerable pressure on the equity markets. 

Sunday, November 1, 2020

KSE100: Week 44-2020 Closing Notes and Week 45-2020 Outlook

KSE100 saw its worst weekly drop since the COVID-19 crash and closed at a weekly loss of  -1378 (-3.34%) points. The last trading day constituted to a crash where KSE100 took an intraday dive of -1,911.43 points and recovered to a day close of  -1,298.86 (-3.15%). 

Inline with our previous post, 41900+/-200 acted as a hard resistance on closing basis and halted the upwards  momentum, breaking the immediate support at 40700 +/- 200 and taking an intra-day bounce from the lower boundary of pivot zone 39300-40000, while closing has remained below 40700+/-200 demonstrating a sign of weakness.  Therefore, it is not safe to assume that bearish spell is over. The index has added to its challenges and must sustain itself above the pivot zone with clean break above 40700+/-200 required for bulls return. In event index faces multiple rejections from 40700+/-200 and breaches the pivots zone downward then it will be leading towards the floor. Creating a lower-lows and lower-high in a classic falling wave pattern.  

Looking forward, we expect a weak recovery on the week opening and pivot zone to be tested one more time on closing basis. This will determine the future direction of the index with week 45-2020 being critical period for evaluation.

After two weeks of moderate gain, weekly average capitalization saw a minor drop at week 44 closing. much of it contributed by the crash of last trading day. However, the average is still floating higher than Week 41 and 42 average.  Events which may influence the capital markets are PIB and MTB auction on 4-Nov.