KSE100 09-2021: The Belly Dancing Index!

Weekly closing observed a net loss of -27.67 points or -0.06% with the index movement swinging sideways like a belly dancer. The spillover effect of political noise kept the investors confused throughout the week. The index has breached its first support multiple times but rebounded from its pivotal support which makes for a frustrating range-bound movement. With just a week shy of mid-March, we had accurately predicted the onset and behavior of the correction cycle. Currently, the index is afloat below its pivotal resistance of 46100 +/- 100 with a declining momentum and a bearish divergence signal. Major support levels remain intact at 45500 - 44700 +/- 300 and floor at 43800 +/- 300 with a low probability of the situation going that worst.   

On the international front, oil has rallied to record high for the first time post-COVID19. OPEC has treaded cautiously to roll over their production cuts rather than boost production. Whereas, the Biden administration remains committed to green energy by slashing American oil production. The combined impact of these events makes a bullish case for oil therefore OEP sector is likely to remain in the spotlight. 

Looking forward, we advise you to get ready for bear hunting as their head are about to emerge from their hibernation caves, and don't be distracted by the belly dancers! We are on track as planned (refer to the previous few week's updates for better clarity).

Weekly average capitalization fell by -38.39 billion/PKR despite the spectacular rally observed on the last trading day. However, the drop is significantly less when compared to the previous week, demonstrating investor confidence in keeping the inflows strong. The sixty weeks trailing capitalization shows a gradual crossing of the linear trend line over the long-term horizontal resistance of 8000 billion/PKR. This signals a strong probability of the next bull breakout if it is honored as support.

Events that may influence the equity markets are the MTB auction on 10-Mar and Ijara Sukuk auction on 11-Mar, 2021.

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