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!