Karachi Stock Exchange "Forecast for 2nd Week of Dec"

KSE-100 “Elevating Fear in a Falling Market”

By
Khalid Saifuddin
Sunday, Nov. 29th 2009
info@safelyinvest.com.pk

KSE-100
Market gone thru a depressive week with really low volumes, most of the expected danger was already mentioned in earlier report and posts; more range bound activities expected with the depression, few little upward moves will not open avenues for buyers. Now we have more indications for down trend. The last Qtr corporate results may support the market.
9,130 to 9,185 can be a major resisting zone for the market, crossing this zone with the bull power will give confidence to the investors.
The impact of Dubai crisis in global market is not over. The investors required to focus precisely on foreign investor’s position because the first week of December recorded the outflow of 41% of November holdings, so if this continues then the market will definitely get into complete bearish trend from the current range bound activities. Though the local institutions were supporting the market and the very few developments like the war on terror wasn’t able to support market and at the end Pindi blast become the last nail in the coffin and the fear of security will impact more in near future. Increase in trader’s participation may strengthen the market little bit. I see US will be using the Weapon of funds inflow to strengthen Pakistani administration anarchy, as we get more inflows after the series of drone attacks. IMF also preparing to review on 12th, I am still wishing for have leverage back to the market, all these may charge bulls a little bit

Recommendation:
Traders must be very picky in present scenario, OIL, Fertilizer and Energy sector will be a good choice for trading, and Insurance can also benefit to small lot traders.


Recap of past week:
In our last report it was clearly indicated about the danger. We also highlighted the major concern which can affect the market and they did, at the end market closed in danger zone with shrunken volumes and range bound activities for the week
As it was mentioned earlier that Market currently at decisive point and the issues like NRO, 17th amendment, possible reshuffling in Cabinet, Sindh Governorship, burning Baluchistan, the corporate circular debts, industrial crisis, power shortage and upcoming gas shortage will keep the investors away from the market. Thanks to almighty we do not have the direct impact of global markets which are affected by Dubai crisis. Though the local institutions were supporting the market and the very few developments like the war on terror may help market but the Pindi blast become the last nail in the coffin and ultimately the week concluded with depression

Market Fundamentals: Weekly Snapshot
By
Farkhunda Jabeen
Sunday, Dec. 6th 2009
info@safelyinvest.com.pk

Our financially globalize equity market is indigent amid flagging foreign investors’ confidence.
After rewarding optimistic reception to monetary policy and ricocheting economic indicators, waning confidence of foreign investors in the course of recent Dubai financial crisis is continued to lead our equity markets to an oversold position. KSE index hit hard along with other equity indices worldwide. The index is now ready to turn and stay red following any signal about pressures on it. Although Pakistan banks' exposure to Dubai crisis is within manageable margins but eroded risk appetite can influence FPI that has been the key driver of KSE.
While visualizing medium and long-term outlook, some favorable developments are in pipeline. Pak-German BIT is one of them. The pact is not only providing insurance against social and political risks of Pakistan but also paving the way for its unrealized investment potential, exploiting its untapped resource base, and enhancing financial assistance. This unrealized potential has also been realized by some other nations which are geared up to access the potential through different pacts. Mounting export of our skilled manpower is also adding on the imminent optimism of the country on the back of increasing remittances. Another financial assistance of $500 million is being assured by World Bank to facilitate the economy to get back on track.
In terms of specific sectors, power sector shows northward outlook of its trend at KSE. IPPs are chief beneficiary in this case which ensure decent returns and high earnings certainty. Upcoming expansion projects would also boost the sector’s performance. But on the other side, sharp hike in gas prices by 18 percent are depressing fundamentals of textile and cement sector. Increase in prices of cotton and its supply-shortage are further disturbing textile sector in its critical budding stage of recovery. Plus, on going circular debt issue is raising liquidity concerns for OMCs, Refineries, and IPPs. This may attack the supply chain of oil to IPPs.
So, a mix bag of optimistic and pessimistic sector-wise performance is taking its position. To reap the fruit of forthcoming opportunities, foreign portfolio investment should spring back on their track to recuperate the country’s risk premium and have the market rally around the track where investors can re-envisage uphill trend.


FOREX
EUR/USD
By
Khalid Saifuddin
Sunday, Nov. 29th 2009
info@safelyinvest.com.pk


Technical Highlights:

USD against EURO climb after the news for the Non Farm Payrolls, and it never looked back. U.S. Economy only lost 11,000 jobs as it was estimated 108,000 off. The EUR/USD pair reacted suddenly and moved 200 pips in downside on last day of the week, later on supported at the strongest support. This bounce off of the strong support level could provide an excellent opportunity to get into buy of EURO targeting 1.4910 level. (we already given a buy call on Friday)
And if the pair breaks the level and hit our stop loss then we will see a major bearish move, currently pair go up, then medium term selling pressure expected long term is Bullish

Fundamental Highlights: Strong capital positions seem to dodge the bullet.

Gone the threats of hurting from world’s financial crisis; recent Dubai debt crisis has swapped the same threatening spot to hurt financial markets, despite recent and imminent signs of economic revitalization. Different regions, from Asia to Europe, have exposure to Dubai debt, though impact of Dubai debt crisis is country-specific; not the region one. Fundamentally, currencies of U.S. and Euro zone should be least affected by it. U.K, being one of the high exposed countries, has not much currency-wise attachments to EUR. However, banks of these nations are ready to dodge the bullet on the back of their strong capital positions. Other highly exposed nations include U.A.E as well as Dubai itself. Over and above, the impact of investors’ sentiments shouldn’t be dubbed under fundamental upshots. These sentiments are not only impinging on Forex but also on equity markets throughout the countries of different regions. What can be complimentary now, is the behavior of investors who are gearing up to divest from Dubai markets and invest in other burgeoning markets where news flow is playing its part lucratively to defend the respective countries in terms of having least exposure and thus being least concerned.


For further assistance and live calls on EUR/USD you are always welcome to contact me @ safelyinvest@gmail.com

Disclaimer: This commentary, key levels and news are 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.