KSE 100 Week 30-2021: COVID Returns?

The week saw a range-bound performance in line with our expectation due to a multitude of factors but observed support at 47000 +/- 300 which was previously major resistance now acting as support. Honoring this level will keep the bourse in the accumulation phase followed by a recovery. All support and resistance levels are marked on the chart below. 

Looking forward, the bourse appears to be consolidating for the next upside on purely technical grounds but the uncertainty of COVID panic may very well push it to the other side. Observe with caution and avoid hasty trading is our word of advice. We expect the period between mid-Aug to mid-Sep as the prime point to sell-off. 

A major event that marked the outgoing month is the introduction of 60 & 90 days futures in accordance with international practices. This will help dampen the short-term volatility by a moderate margin and provide wider swings in the 90-120 days trading time frame. It's a win-win situation for those who understand investing with patience. Availability of a longer duration future will also take away the stress in taking a short position but at a cost of imposing higher margin requirements v.s 30 days future. Overall, we give a positive rating to this step initially but its long-term impact will only be visible in the next few months. 

Average weekly capitalization eroded all gains made during the earlier week to effectively close flat. It may be attributed to hasty profit-taking during the second half on Friday triggered by news of lockdown enforced in Karachi. 

Good luck with your trading and if you enjoyed reading this update, do let us know in the comments below.