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Sunday, November 28, 2021

KSE100 Week 47-2021: A Stab in the Back!

 After the software failure woes of Jul-Oct, now comes another bleeding session to PSX. This time a gaping wound of an interest rate hike. While a rate hike was well expected due to overheating economy, the jumping increase of 150 bps has jolted the investors out of their seats. At times it feels the steering wheel of policymaking is broken causing the economic vehicle to steer erratically from side to side. Overall the decision of such a steep hike feels like a disaster as it will negatively impact a wide spectrum of economic activities and may not yield any sizeable benefits to cut down inflation. On the global front, another rapidly spreading variant of COVID-19 named "Omicron" has sent the government into panic lockdown and dashed the hopes of economic recovery and early policy rate hikes. 

Looking forward to PSX, a double bottom has been observed at 43800 +/- 300, bourse remains unstable in the light of ever-changing economic tides, economic disturbances, uncertainty, and political instability. In the light of global events and economic distress prevalent in the country, we can only hope that the policy rate hike may be a temporary decision - albeit a short-sighted one. Although the economic history of the country tells us that rates once gone up rarely come down again. Another concerning event is the rejection by IMF on the $6 billion bailout program. Although not directly related to the PSX, such events do create pressure on the USD/PKR currency relationship. 

Looking forward, we market turbulence to exist in foreseeable future keeping it unpredictable and nerve-wracking. 

Saturday, November 20, 2021

KSE100 Week 46-2021 Closing Notes

The index has carved a new bottom at 43000 +/- 300 and a pivot at 45800 +/- 100. These levels are higher highs indicating a potential of the index reaching a new high for its final rally. The chart below still indicates the same old levels but after a confirmation during the week ahead, it will be updated. A potential downside risk is a speculation on the SBP policy rate hike. However, the mixed signals from global markets and the resurgence of COVID may alter the course. The majority of expectations are towards a hike or stability. It would be really surprising if the rate is cut instead. A major disappointment has come into the market after the failed software rollout and investment confidence is badly hurt, which is portrayed in the slow recovery of the bourse as an investor remains cautious after a traumatizing experience. Looking forward, we expect recovery to continue. Dips can be buying opportunity, the bourse direction hangs in a balance with bulls and bears exerting an equal force. The week ahead is an interesting one indeed. 

Weekly average capitalization once again closed in the red but with lower losses as compared to the previous week. The trend towards the end of the week has witnessed growth. There are no financial market events in the week ahead - a positive trigger for equities. 

Monday, November 15, 2021

KSE100 Week 45-2021 Closing Notes

After three weeks of winning streak, another break strike comes to the bourse as it hit the critical resistance of 47000 +/- 300 but at least this was in the naturally expected momentum of the market. Much needed pivotal support lies at 45100 +/- 100 which will bring the bulls back into action but the field is already conquered by the bear now. Further S/R zones are marked on the chart below. 

On the fundamental side, the rocky road with the IMF package has led to the destabilization of PKR vs USD setting off shockwaves of panic resulting in a meltdown of investor confidence once again. But looking at the week ahead, there is light at the end of the tunnel with Saudi deposits materializing and IMF negotiations progressing. Looking forward, the rocky ride remains the fate of PSX, and being prepared for disappointment will dampen its effect. Policy rate announcements remain another threat to the bourse where any hike in interest rate may set off a wave of selling. 

Critical benchmark of 8000+ Bn/PKR once again turned into a sell-off with the week closing at a net loss. The force is strong at this level! Events that may negatively influence the bourse is MTB auction on 17-Nov, 2021. If you enjoyed reading this update, do let us know in the comments below. 

Sunday, November 7, 2021

KSE 100 Week 44-2021 Closing Notes

 This is a delayed update due to bad health. So only data will be presented while the stance is carried forward from the last week.

Market capitalization once again climbed upwards and crossed the 8000+ Bn/PKR benchmark. The upward trajectory is likely to carry on if there is no negative influence over the bourse. The expected risk may be from the expected monetary policy due soon. Events that may influence are Ijara Sukuk auctions on 11-Nov. 

Monday, November 1, 2021

Week 43-2021: Closing Notes

In line with our expectations, the bourse has resumed its bullish trajectory and is likely to continue for the next few weeks. Major support and resistance levels are marked on the chart below. In a major setback, PSX has reverted back to the old trading system, relieving the participants from many unexpected losses and mental stress. Poor management and lack of sufficient procedures create a very nervous situation for investors. Looking forward, the strategy remains to buy the dip. 

Market capitalization growth was less than ideal but the week still closed with net gains. It is headed once again towards its benchmark resistance between 8200 - 8400 Billion.