Karachi Stock Exchange and Forex View

Technical Forecast for KSE-100
For the 2nd Week of Nov, 2009

By
Khalid Saifuddin
Farkhunda Jabeen
Saturday, November 7th, 2009


KSE-100
Recap of past week:
Unfortunately the selling pressure continues this week, though it was observed that the mutual funds were also took part in buying with the foreign investors, but on Friday both the FIPI and mutual funds were in selling by USD $ 1,844,292 and USD $ 2,441,285 respectively. Comparing with the last week the weekly FIPI decline by USD 3,169,394 and the KSE-100 index volume Decline by 281,020,736 shares. The law and order situation was also the major source for shattering confidence of the investors, further pressure added by the ongoing political crisis. It is observed that investors were discussing the options available for the future administrative setup.


Market Technically:
Friday the market closed around one of our given level, in fact this level has the ability to bounce the market back into its previous channel, and it will only happen if the market trade positively all day on Monday. The trend is still not established so any positive development can take market back into the bullish hopes. And I also like to add that negative closing on Monday will add new selling pressure to the existing selling pressure.
The coming week may bring some progress as it is recorded that the inflation rate is declined and the leverage product is about to announce. Still the net of FIPI is in positive, here I see the responsibility of local institutions to come forward and support the market, as most of the scrip are trading on discount rate and the some sectors are about to perform good in their last quarter.
Above all the achievements of Pakistan army is remarkable in Wazirstan operation. Most of the nations realized that it is required to strengthen the Pakistani economy along with the moral support if they really like to eliminate the global terror threat.


Recommendation:
Currently market is in bearish mode but Monday will decide the move of the week; I recommend all of my traders/investors to hold their positions until the final selling call. You might see range bound activities this week. Increasing volume may give some confidence to the traders. Focus on key levels and the portfolio investment with specific selection of scrip. You may see some dancing bulls over 9265.In fact the 9150 – 9250 is the crucial zone for the market
Some short term buying possibilities still exist in the market, investors must do profit taking if they see 9,145 on Monday. The ultimate hopes are still bullish; market will give a chance to the target buyers for high returns.

Maximum Possibility of Weekly High and Low
9,448
8,937

Key Levels
9,250
9,155
9,104
9,026
8,888
8,791
8,433

Portfolio Investment: Weekly Snapshot

Market was under selling pressure in past week, though the mix bags of results announced depicted satisfactory performance of some scrip; in fact fewer were remarkable.

What’s more, the upcoming leverage product in KSE will also boost volume and market capitalization may shift the trend northward.
For oil sector, inching up trend in the international oil price plus recent discoveries and exploration are expected to fortify the top line.
For banks, credit cost is expected to decline and liquidity position should improve in 2QFY10 due to relatively lower net liquidity drain through T-bill auctions.
At macro level, notable drop in headline inflation to a single digit portrays spring back of our economy.
Foreign aid with the goal to waive twin deficits can prove to be handy for external account deficit but unfortunately not for fiscal deficit due to dismal tax collections and higher security related expenditure. In this regard textile sector – contributing 55-60% to total exports and 8% to GDP – has begun to rebound indicated by 7% growth in first three months of current financial year. This bounce-back would be propped up by expected drop in discount rate by SBP. However, raise in cotton prices may lift up cost but it can be well overcome by upturn in demand for our textile products in international market.

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Key Levels
1.5074
1.5056
1.5021
1.5010
1.4993
1.4925
1.4892
1.4873
1.4855
1.4841
1.4802
1.4787
1.4770
1.4754
1.4736
1.4724
1.4692
1.4651
1.4614
1.4472
1.4060
1.3989
1.3784
1.3437




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Disclaimer: This commentary is not a recommendation to buy or sell, but rather a guideline to interpreting the specified indicators. This information should only be used by investors who are aware of the risk inherent in securities trading. We accept no liability whatsoever for any loss arising from any use of these levels. However the author DOES NOT GUARANTEES the accuracy of information provided on this report and is NOT RESPONSIBLE FOR ANY ERRORS AND/OR OMISSIONS.