History has an uncanny tendency to repeat itself. How else would one explain the KSE-100s pre-election movement that this column wrote about on April 30?
Titled KSE-100- jitters? What jitters? the column opined that the nearly 100-point slide on April 29th was only temporary. It also noted that if KSEs historical pre-election movement was any guide, the market would likely bounce back and stay uppish till the day of the election. The index has been so since then - rising three percent since the start of this month.
The big question now is what will happen after the elections. The interesting bit is the answer may lie in history once again.
BR Research took a quick at historical post-election trends and this is what it found out. Market reaction in the first 7-8 days after the election is positive. Then the benchmark index either falls or continues upwards till the 12-13th trading session, following which it mostly maintains a by and large range bound behaviour for a considerable period.
It is only by 34-36 trading sessions after the elections that the market actually picks up a direction. This is where it gets even more interesting: the direction it takes after the 36th day has been in line with the indexs movement between 8-12 days after the election (see red box in the graph).
In the case of 2008 and 1997, the index went down, whereas in the case of 2002 it went up - tracking the movement between 8-12 days in both cases.
This may just be a happy coincidence. But if it is any guide, then KSE-100 can be expected to move further up in the first 7-8 trading sessions after May 11 - pushing the index to what Qasim Anwar, Technical Analyst at AKD Securities, calls a technical resistance around 19700-19800 points.
"The market can be expected to lose momentum near those levels, following which a consolidation may be in the offing," he said. If that happens, history would have repeated itself again.
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