Charged up and heading north, the KSE bulls are back in the league after a long hiatus of four months between April 14 and August 20. The benchmark index KSE marked 8710 points - a level last seen crossing upwards in October 2005 - on Monday's intraday trade. That day KSE-100 closed at 8675 points, showing a gain of 11.8 percent in August, its biggest monthly gain since March.
In part, the move comes on the back of cheap valuations relative to the region, boosted further by $95.3 million, 17-month high of foreign portfolio seen in the last 30 odd days, according to NCCPL data. And from the looks of it, the momentum is still strong with elementary techies suggesting the move should be further up.
Advance/Decline ratio - an indicator of market breadth - has ticked up to average 140 percent since the bullish trigger seen on August 18 as against 118 percent in the fortnight before. Likewise, average turnover at the exchange has risen 22 percent to 143 million during the last fortnight, while the number of trades is also firming up, showing signs that the market is slowly gaining traction.
But be cautioned here: volatility can be pernicious: average difference between high-low has been edging upwards to 200 points in the last five sessions from an average 133 in the fortnight before.
While this does not signal the resurgence of KSE bears, as the overall trend is still positive, it does mean that a brief pause for the bulls is in the offing around the current level, especially seen in light of rising RSI values of late.
Even if the rally does not stop here, it will likely loose steam around 8900~9050 points in the upcoming sessions at the most, keeping in mind the index's historical stop-points at 9042 and 9081 levels in its last upward move three years ago. Following that, the market will likely churn between 8300-8900 up until Eid, before its next target of roughly around 9500~9600 points is hit by the end of September or October's first week.
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