With the benchmark index Pakistan Stock Exchange finally taking a pause yesterday, has the inevitable happened? That’s the question on many a mind as they start trading today.
One thing is for sure: the index had gained for eight straight sessions before yesterday; the week ending last Friday had seen the KSE-100 post a 11-week high return of 4.7 percent. Which means a correction, or a breather was already overdue. This should have been priced-in by most traders, unless they are living in la-la land.
Consider also that KSE-100 had hit 37,182 in yesterday’s intra-day trade, which is rather close to the immediate resistance that stands around 37,400 points. Combine the inevitable breather with a major resistance level, and you have a reason to pause, especially considering that the market is a long way up from its multi-year low of around 28,000 levels in hit in recent memory. Remember the economy is showing signs of stability, and not signs of promising growth as yet, and therefore there is no reason to get excited too much too soon.
Meanwhile, October’s unexpected inflation spike has thrown a spanner in the works. Secondary market 10-year bond yield that had hit 11.25 percent in the third week of October – its lowest since 2017 – moved back to 11.35 percent by yesterday’s close. This might force some players to rethink their decision to move back into equities, even as IMF’s clean chit over box standard stabilisation measures should be giving confidence to the market instead.
But one person who is likely to shave off that confidence is the Moulana. As political climate heats up, the Moulana appears to be a stuck in a cul-de-sac. Already his statements in; and they don’t look good; plans of implementing plan-B and the country wide sit-ins even at the cost of lives and what not. With PML-N chief likely going out of the country, Moulana’s march may end being a damp squib. But no one knows that for sure. Which is exactly why, as discussed earlier, don’t expect bulls marching in while Moulana’s uniformed men march in Islamabad and elsewhere. (See Will Moulana’s rally clip PSX’s? Nov 4,2019)