Search This Blog

Friday, January 29, 2021

KSE100 Week 04-2021: Bulls Charge Back!

 The index observed a volatile week where bears tried to invade at first but the bulls fought back successfully and held their ground. 46100 +/- 100 pivotal resistance finally turned into pivotal support which demonstrates the ball now moving in the court of the green team! But overall index failed to touch its critical resistance of 46800 +/- 300. Rather it struggled all week in a narrow range giving an impression of the exhausted bull in the fighting ring pulling back and charging forward a limited distance but too fearful to take on! Divergence signals triggered last week remains active - requiring a cautious stance ahead. However, the index will turn bullish once again if a break above 46800 +/- 300 is observed with strong momentum. On the downside, the pivot is at 46100 +/- 100 and support levels are 45500 - 44700 +/- 300. The index closed with a net weekly gain of +517.5 points or +1.13%. Once again, we reiterate our stance on late Feb to mid-March being a high probability period for bear hunters to pick their trophies! 

It's more than a hat trick when it comes to market capitalization as it demonstrated a four-week winning streak of sustenance above the 8000+ billion/PKR benchmark. Strong cash flow shows investors remained confident across the week and dips were absorbed as buying opportunities. A granular look of the last trading weeks tells us a range-bound picture with intraday capitalization fluctuating in a narrow range. This may be interpreted as either start of the distribution cycle or the exchange of hands within the sector. Close guard ahead may tell a better picture. Overall the rise of the index value is supported by the cash behind it so just follow the money. The outgoing week closed with a net gain of +71.84 billion/PKR.

Events that may influence the equities markets are PIB auctions on 3-Feb, 2021.

Happy trading and if you enjoyed reading this update please leave a comment below! 

Monday, January 25, 2021

KSE100 Week 03-2021: Bulls Bleed a Little!

 The week closed with a net loss of -63 points or -0.14%. Speculation over the interest rate kept the momentum weak and the index faced continuous rejection at its pivotal resistance of 461000 +/- 100. With the rollover week ahead we expect the index to remain volatile until weekly closing and technical levels of S/P/R remain unchanged. Initial support stands at 45500-44700 +/- 300 while the expected current channel top is at 46800 +/- 300. The divergence signal indicates potential exhaustion and may prove to be a trigger for major profit booking. With the weakening momentum, the probability of trend reversal is higher than a significant breakout above the current channel top. The period between late Feb to mid-Mar will be of critical importance and a grazing party for the bulls of next season!

While index capitalization has once again closed above the benchmark of 8000+ billion/PKR but it is finding it difficult to break further high with range bound movement observed. The weekly average closed with a minor net loss of -33.21 billion/PKR which indicates that no significant withdrawal of investors was observed and the change may be caused by sector rotation. 

Events that may influence the equities market are MTB & PIB auctions on 27-Jan, 2021.

If you enjoyed reading this update, please leave a comment below. Happy trading! 

Monday, January 18, 2021

KSE100 02-2021: Bears Waking Up!

 Three weeks of winning streak started to show signs of exhaustion as bulls began to lose breath in the race. Consecutive rejections from the pivot at 46100 +/- 100 were observed and overall weekly closing remained below the pivot. WoW basis index made a net gain of +276.66 points or +0.61%. 

Looking forward, the exhaustion signal is obvious and some dip for correction is imminent. 45500-44700 +/- 300 are previous resistance acting as support while 43800 +/- 300 is channel bottom of the current cycle. On the upside, the current channel top sits at 46800 +/-300 and looks difficult to breach. The strategy shall be to sell on strength or protect profits with stops. 

The bulls may need to pull back for a refresher and charge again with full vigor. With the winter season approaching an end, it's also time for bears to come out of hibernation and hunt for some healthy food. Let's hope not too many bulls become a feast serving for the angry bears - otherwise, it may turn into an ugly blood bath!

Another week of solid performance as market capitalization sustained above its critical benchmark despite some profit booking witnessed towards the end of the week. Average weekly gains stood at +110.34 billion/PKR, clocking in lower than the previous week. This can be attributed to profit-booking activity. 

There are no money market auctions during the week ahead (18 to 22 Jan) which may impact the equities market. 

If you enjoyed reading this update please let us know in the comments section! 

Sunday, January 10, 2021

KSE100 Week 01-2021: Energized in Full Swing!

 The first trading week of the year 2021 did tremendously well and beyond expectation. The outgoing week demonstrated a net gain of +1220 index points or 2.74%. The bulls took out two fresh resistance levels with ease, reaching our predicted high of 45500 +/- 300 relatively quickly. However, signs of exhaustion are starting to emerge, and looking forward we may witness a cycle of profit-taking. On the downside, previous resistance will now be acting as support with any major downtrend exposing 43800 +/- 300 once again. While on the upside, we keep our view limited and do not expect any major breakout. There is intermediate resistance at 46100 +/- 100 and critical resistance at 46800 +/- 300.  Expectations may be wrong but with signs of obvious exhaustion, one must practice caution to protect profit. The week ahead will be a major decisive moment.  

An amazing feat indeed as market capitalization floated above 8000+ billion/PKR for the entire week with a weekly average closing at 8221.30 billion/PKR and a net gain of +196.68 billion/PKR over the previous week. The investors have once again proven their confidence in PSX and absorbed the dip as a buying opportunity. Over the week, SECP also announced a working group to develop a private pension market (link-1) If this plan goes into action anytime in the future, it will translate into massive funds injection at the bourse. 

The event which may impact the equity markets are PIB auction on 13-Jan, MTB auction on 13-Jan and Ijara Sukuk auction on 14-Jan, 2021.

If you enjoyed reading this update, please let us know in the comments below.

Saturday, January 2, 2021

KSE100 Week 53-2020 : A New Year With A Bang!!

Let us start by offering our condolences and prayers for all the departed souls who are no longer among us to witness the new year's sunrise. The outgoing year has been a tough one with COVID19 wreaking havoc on every front. The deep scars of a pandemic will take a long time to heal. Homo sapiens have survived the planet earth for millenniums by using their ingenuity and consciousness to fight back nature's challenges. And no doubt, we will emerge stronger and better out of this one too! 

KSE100 ended its last trading week of the year with a net gain of +1018 index points or +2.34%. The outgoing year has been a remarkable ride of record lows and highs in one of the shortest time periods ever witnessed. This is the stock market, fortunes are made and destroyed here! During the week, the index struggled at its pivotal resistance with a surprise breakout towards the first indicated high of 44700 +/- 300. Looking forward, we expect to see some corrective dip where 43800 +/- 300 will retain itself as critical support, and the major trend remains bullish as long as critical support is honored. Cement and steel are expected to benefit on the back of massive construction and housing plans, auto-sector may see new policies especially on green vehicles. Debt retirement plans are positive for the energy sector while rising exports of food and textiles are positive for respective sectors. Developments in COVID19 treatment may exert a positive influence on the pharma sector.   

The spoiler alert, index breakout was majorly contributed by the energy sector which rallied irrationally on the headline of circular debt retirement plans by the government (Ministry to pay 30pc of circular debt to IPPs). This kind of speculative rallies tends to deflate as soon as they inflate so we urge caution ahead.

A little cause of celebration, as for the first time we witness weekly average index capitalization to close above 8000+ billion/PKR but it is yet to break out from this narrow resistance channel. But little signs are encouraging. The week closed with a net gain of +99.75 billion/PKR which does not correspond well with the substantial rise in index points. 

Happy trading and if you enjoyed reading this post then please leave a comment below!