Morning call for Wednesday 5th, May, 2009 Karachi Stock Exchange (KSE-100)

KSE is about to make quick turn
As I mentioned in my weekly update, Monday and Tuesday will be volatile and difficult, now onwards I am looking at little better trading in remaining days of the current week. I am looking at some reversal trend for tomorrow, though we are still surrounded by unsolved political crisis.

Weekly Forecast for KSE-100
(May 4th, to 8th, 2009)
Karachi Stock Exchange still looking for its direction

Technical Outlook:
I am still close to the past week analysis, as we did not get any positive changes in last week. Though we lost around 400 points this week, but the buyer still excited and trust me I can feel the eager of investors to get into the market.
Monday is very important and its closing will might help us in finding the new trend. As we have more indications of bearish trend pertaining the last 2 weeks data.

If the market keep the index above 7215 most of the hours on Monday, that will help market to get back on its path. I will not recommend any short on Monday, though I see market will surely testing 7188 in the early hours.

I found some indications of reversal trend which is surely related to the investor’s confidence. I am still optimistic and not calling it bearish trend until I see the Monday closing.

As I am not confirmed on any of trend right now, so I am giving you two ranges of the market this week. (One of these might get confirmed on Monday closing)

Major trading range in case of bullish trend will be: 7675 – 7150
Major trading range in case of bearish trend then the range will be: 7297 – 6625
Volumes getting lower as we experienced in past week and I do not see any reason for increase volume

Key Levels 4 Week
Support Resistance
7188-7200 7675
7120-7140 7466-7478
7061 7325-7343
7005 7270-7296
Long-term Supports
6800 and 6625

Political impact on Market:
Anti-Taliban action in Northern area remained a major concern for both local and foreign investors while support of state-run funds gripped the market throughout the day to absorb panic selling on the prevailing security situation in the country despite the overwhelming results in oil, banks and fertilizer sectors.

As we had major political concerns which caused major decline of public interest in the market last week and unfortunately few more issues added to the country’s political situation.

The northern area crisis is still under paramilitary operation and negotiations.
We also got Karachi violence and its reflection to the economy; it will hurt confidence of the daily trader. Moreover the politicians still not yet decided on 12th, May

Recommendations:
Do not short on Monday; expect some high volatility on Monday and Tuesday, Wednesday onward market will gets into normal behavior. I will prefer buying on given support levels, and short term selling on resistance levels. Volume squeezes, the buying pressure may initialize this week. There are more chances of reversal trend rather going down further.