Surprise, Surprise - look who has bought in the market. Yes, its the retailers. Tempted by the sight of 10,000 points hit earlier this week, and by the talks of economic recovery, retail investors are now at the buying counter after a hiatus of many months.
Weekly data released by NCCPL shows that the individual class of investors, who were mostly net sellers since October 2009, bought $4.3 million worth of shares in the regular market last week, as selling in the first two sessions was offset by $7.9 million worth of purchases in the last three trading sessions.
A careful look at the graphs is a reminder of the age old adage that you know when the market has peaked when your taxi driver, or the laundry man for that matter, starts asking "sir, which of the stocks you think looks good".
On the contrary, however, funds and NBFCs have been relatively silent. Although, they invested about $1.8 million last week, they are still net sellers in the month to-date. NCCPL data shows that domestic funds/ NBFCs have disinvested $2.5 million so far in January compared with net investment of $14.07 million in December and $11.5 million in the month before.
But so far as foreigners have their faith in local equities, perhaps there is still room for the market to expand. Though, foreigners were sellers last week with a mild outflow of some $52,000, they are still net buyers with net inflow of $16.6 million in the month to-date.
The continuation of this foreign interest in the light of sell-side opinion tilted towards 11500~12500 in the medium term, may push the index to test 10,000 plus levels yet again. But the important question is when.
Technical analysts, who follow the trends in price and volume, believe KSE-100s undertone is still bullish and that stocks would resume their upward journey soon, despite the sharp fall from intraweek high of 10,012 points on Wednesday to a low of 9718 points hit on Fridays trade,
A few others, however, who suggest selling at strength of 9870~9920, view that the market would have to test 9570 points, seen likely this week, before they decide which direction to take. Other pundits talk about the great tug of war, between the bulls eyeing 11500 and the bears vying 7500, due to take place soon near 9300-9500 points.
How exactly will equity prices play out will be interesting from this point, which is termed critical by certain market quarters. But even more exciting will be watching retailers getting ecstatic on bullish spirits and buying aggressively at higher level while the smart money offloads - that is, if they repeat their oft repeated mistakes in the history of markets.
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