The New Rally about to Begin

Last Report for 2009
Well done Bulls
The New Rally about to Begin

By
Khalid Saifuddin
Thursday, Dec. 24th 2009
info@safelyinvest.com.pk

Market Technically:

KSE-100: Bear’s last wicket down by the amazing spell of bulls.
Congrats for Amazing success on this week trading, and folks tell you it is a great achievement if you make money in a lackluster market and you did.
Market looks fabulous and energetic for the near term future. We might see some resistance around 9,483; once crossing and closing above this level, bulls will be dancing all over.
The good news is market got out of depressive range and it may set new targets for near future. Furthermore the coming week closing will endorse the authenticity of the new rally.
I wish market would not close below 9,428, though it’s not a difficult target, but fewer indicators of market are blinking some selling on Monday. And breaking/closing below 9,315 will recharge the bears. Most of the negative events and political conflicts seem to be absorbed by the market.
Key Levels
9,719
9,591
9,483
9,289
9,170
9,067

Recommendation:
Now last call for investors is to re-arrange their portfolio and gear up for gaining high returns in March 2010. Focused buying is required to achieve the target.
It is required for investors to be very specific on scrip selection, target buy will benefit more than the market buys. Banking, Energy and Oil must be your primary selection. Insurance and Cement sector are already benefiting your capital gain

Recap of past week:
The past week had the amazing levels for our traders as our most of the buy calls honored and I am sure the readers of our reports and morning call realized the accuracy of our key levels in past week.
The ups and downs of the market behavior were monitored accurately and on behalf of these levels we had great buy calls. I was feared of going down from 9,293 but later on buyers along with the institutions manage to close the markets above the expected level, but if you guys remember the morning calls of the past week, that was pretty much updating on positive expectations.
And at the end market gone crazy by breaking most of the critical levels and manage to close in comfortable zone.

Market Fundamentals
By
Farkhunda Jabeen

Greenback revivifies: FDI and FIPI should serve as cushion to ensure the money-back.

A mammoth piece of liquidity is going to be injected in our liquidity-evicted economy in form of recent IMP tranche of $1.2 billion. It can be seen that Pakistan faced a 37 percent loss in investment by overseas investors in the first five months of this financial year. Thusly, this active liquidity thrust can revitalize our foreign reserves; however, the foreigners’ interests of direct investments in our economy should be sustained, especially considering the sensitive behavior of FIPIs to country’s uncertainty situation. Though FIPIs have notably rebounded this week compared to the last week, the two ‘golden’ drivers of foreign reserves should remain persistent and encouraged in order to uninterruptedly repay the loan. No doubt, some of our high potential sectors are encouragingly playing their role in enticing foreign investments specifically in the recent scenario of shedding foreign investment.

The IMF disbursement, along with first tranche of USD 500 mn under Kerry Lugar Financial Program would put the seasonal spike in external debt servicing burden on a normal footing and thus stabilize the PKR.

As far as the issue of eroding foreign reserves is concerned, Ministry of Finance is considering ingoing into a currency swap agreements with China and Malaysia, according to which these countries will import from us in PKR and we will import our raw material and capital goods from them in Yuan and ringgit respectively. The agreement is yet at its initial stage and it may take some time to become operational by the banks, but it can well contribute in sustaining our greenback reserves, internationally required currency units.

A good move also includes the designing of new investment policy to protect local and foreign investors. According to the policy, customs duty would be reduced from 5-1 percent on capital goods and raw materials. There would be no sales tax and withholding tax on import of machinery. This would help trim down the cost of setting up of industrial units in the country.

This assortment of triumphs should prove to be a positive elicit for our equity market.

On the other face, some rowdy issues include rise in electricity tariffs and gas shortage are severely affecting key industry players. Textile, being the main export participant, is suffering around billion of losses due to the prevalent crisis. Besides, exports under Export Processing Zone (EPZ) have declined by 10 percent during July-November 2009 against last equivalent period.