KSE's devilish slide

Call it superstitious, but yesterday's 666-point slide at Karachi Stock Exchange doesn't seem too well for the market. The 2.2 percent fall yesterday-the biggest single-day fall since September 30, 2013, probably hurt a lot of sentiments or egos or both. Thankfully though, those who followed this column on July 18th probably avoided getting their fingers burnt.
Recall that last month, the day after KSE-100 finally managed to cross the 30,000 mark, this column maintained that crossing the so-called 30-k psychological barrier wasn't the break out moment investors were waiting for.
"Technical charts suggest that the current spike market will likely lose steam around 30,500-600," this column asserted in the article titled What's next for the stock market? published on July 18. By July 24, the benchmark index hit an intraday high of 30,640, and has been receding since then, culminating into a huge downfall yesterday.
Back then, market pundits were touting Moody's ratings as something of a trigger that would push KSE to the stars through the skies. But, what they overlooked in their excitement is the gathering storm on the political front.
Or perhaps the downplaying of political noise was intentional: i.e. paint a rosy picture, push the market higher, dispose off the stocks--mostly to clueless foreign players (who were reportedly rather frantic yesterday)-and wait for the market to tank again.
According to NCCPL data, foreign portfolio investors bought $28 million worth of equities during the six trading sessions between July 18 and 28, whereas local mutual funds bought about $9.8 million on net basis. In contrast, banks/DFIs, companies and local individuals were net sellers with an outflow of $2 million, $3.5 million and $7 million, respectively.
Now, as the index approaches its 30-day moving average, it may find some feet around 29,000 levels, though given the short covering of about 64 million shares from yesterday's lows, a short-lived rebound is possible.
Following that, the index can be expected to show dicey movements as views, perceptions and opinions are divided over what's going to happen on August 14. Whosoever is sure of what's going to happen is either the puppet master himself or just acting like an over confident Mr-know-it-all.
Rest of the average Joes who don't want to invest hard earned monies on mere hunches and political op-eds would best stay on the sidelines and selectively capitalize at the dips. First of those support can be expected around early 27,000 points. If that support doesn't hold, then there would probably be no stopping till late 21,000. And this is why yesterday's close smells devilish.