If you hear that Pakistan Stock Exchange is rallying as compared to global capital markets ending in red, believe your ears. Pakistan Stock Exchange PSX has posted gains for the 5th consecutive week, and this is what they call a bullish market. KSE 100 index benchmark closed on 37,608 points gaining 0.74 percent or 276 points for the week ended July 26, 2020.
The KSE 100 index witnessed a volatile session on Friday, as the benchmark went down by 319.04 points and also showed a gain of 285.09 points in the same day, however it gave a green closing by mere 29.41 points at the end.
There are several fundamental indicators that back the rally of KSE 100 index for one is the low interest rate, as SBP cut down the interest rates by 625 basis points in reaction to the COVID-19 distress economic conditions and low business activity. Currently the key interest rate stands at 7 percent with wide expectation of another cut of 50 to 100 basis points.
As per latest data of the Pakistan Bureau of Statistics, Sensitive Price Index or SPI for the current week increased by 0.21 percent; while on yearly basis increased by 10.50 percent. On the positive side liquid foreign reserves of the State Bank of Pakistan increased by USD 94 million from USD 18.953 million on July 10th, 2020.
Major sectors that contributed to the index were banking, investment banking sector, power generation & distribution, automobile assembler, textile composite and technology and communication.
Overall volume was low as compared to previous sessions, total traded volume stood at 266.40 million shares as compared to 379.28 million shares in the previous session. Unity Food Ltd led the market with volume of 21.638 million shares and gained 0.71 percent to close at Rs. 12.72. Karachi Electric Ltd slumped 1.47 percent to Rs. 3.16 with total volume of 16.83 million shares. FFBL gained 4.33 percent to Rs. 19.51 with volume of 15.83 million, HASCOL remained negative by 1.96 percent to Rs. 13.48 with volume of 13.88 million shares while TRG jumped 1.84 percent to 38.28 with total volume of 13.71 million shares.
Technical Analysis of KSE 100 Index
We believe the index will remain range bound as per it Average True Range of 410 for the next week. RSI value of 77 which came down from 82 still depicts market as overbought but strong high volumes also show that market is consolidating at this level to build up a much stronger bullish momentum. In the long run (in coming 1-2 months) index can cross its last year high of 43,000. Other indicators such as Ichimoku Cloud, Commodity Channel Index and Moving Average Convergence Divergence MACD depict market to be bullish, however stochastic shows it’s time to sell. We foresee further minor corrections and range bound activity in the KSE 100 index for the coming week. However, overall stance is bullish and we foresee the index will keep its bullish trend.
Disclaimer: Stocksnequities is blog for Pakistan Stock Exchange. We simply give our analysis as per market data and it should not be taken as recommendation or a tip. Stocksnequities bears no responsibility for any profit or loss realized in stock market by our individual readers.