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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.