KSEs behaviour last week left many market watchers baffled across the board. After topping to 10,012 points a week before, KSE-100s sharp slide has also left gaps between the views of various technical analysts and that of sell-side fundamental guides.
But one thing seems clear: the markets march to its 342-day high on January 20, has proven the limits of bulls strength. The indexs downside volatility also shows that perhaps, greed is fleeting, whereas fear is becoming a permanent feature at the bourse.
This is because the bull rally that began in January 2009 seems to be losing its steam. Marked by falling bottoms, the markets volume is being consistently led by relatively smaller-tier stocks than the blue-chips, as evident by the falling ratio of KSE-30 volume to that of KSE-100..
This doesn mean, however, that bulls would let go of their grip that easily. The indexs snap recovery from its intra-week low of 9413 points on Thursday to 9635 by Fridays close, points in the same direction. But the question is how far would this rebound stretch? While at the moment, the markets momentum looks weak, much depends on how the participants react to the monetary policy.
Yet, given the persistence of bulls, chances are that the hype would attempt to push KSE-100 to 10,000 points yet again - targeting 10300~10400 points - even in the scenario, where investors aren too excited about how the central bank views the economy. But after that, things appear a bit too fragile for a sustainable rally upwards.
And oh! For those who are often quick to point out that as goes January, as goes the market, here is a sad reminder: compared to all that hoo-ha of optimism seen at the start of the year, dear old KSE has fared anything but great.
Excluding the extraordinary weakness in January 2009, January 2010 saw the market yielding a return of just 2.75 percent, as against an average 7 percent return between 2001 and 2008. Need one say more?
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