“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…don’t expect bulls marching in while Moulana’s uniformed men march in Islamabad and elsewhere.” That view was published last week (Nov 13). With the former PM expected to fly out on Tuesday (today), and Moulana’s dharna as well as Plan-B turning into a damp squib, the bulls had a field day yesterday.
Jumping more than two percent amid highest trading value since last November, the benchmark Pakistan Stock Exchange has closed substantially above its key resistance of 37,400 points that it had surpassed late last week. With the KSE-100 at 38,411 points, it appears now that the long-term outlook is positive by consensus, and so shall be the primary trend line.
But this shouldn’t fool people into going blindly aggressive. Talking to BR Research, Qasim Anwar, Technical Analyst at brokerage AKD Securities said the market is near its short-term peak as “momentum indicators have become overheated”, albeit he still thinks the market will likely hit 41,000-42,000 points by mid-January 2020.
Similar sentiments were shared by Gohar Rasool, Head of International Sales at brokerage Intermarket Securities. In his market closing note, Rasool advised “market participants to exercise extreme caution with trading positions and sell on strength,” while expecting a supply zone around 39,000 points.
These views are in line with what was talked about in this space last week: that its best to remain mindful of the fact that “the economy is showing signs of stability, and not signs of promising growth as yet.”
As a result, a six-week consolidation, perhaps even falling below 37,000 in any knee jerk move, should be on the cards. And if the index hits 41-42-K by mid-January, as Qasim expects, consolidation will likely remain the defining adjective for the next few months, unless gates of heaven open and things improve drastically on the macro front. But to that end, latest FDI numbers aren’t very helpful!