By: Mohamed Farouk
Mubasher: The declines seen on Sunday on Boursa Kuwait’s indices could be justified in the light of the continuous selling pressure for the third week in a row on the market`s blue chips, Nawwaf El-Oun, market analyst and trainer at FXTM, said.
The leading stocks have witnessed a better of rally since June through the end of September 2017, as those blue chips grew by more than 40%, supported by positive news and updates from stocks such as Agility, Kuwait Finance House (KFH), and Zain, the analyst told Mubasher.
Gains on the leading stocks have affected the performance of the weighted and Kuwait 15 indices, allowing them to reach record price highs that had not been achieved in almost two-and-a-half years, El-Oun added.
The continuous volatility we are still witnessing on the price index made the entire trading environment a good place for speculative activity on illiquid stocks or small caps, the analyst noted, indicating that this may lead to a rise or decline in the index’s performance but with limited liquidity pumped in selective sectors.
Investors in the market have become notably cautious when it comes to entering the market during the time of earning releases or announcements, the analyst added in a comment to Mubasher.
He further noted that this investor behaviour raises worries among buyers, who are worry about the risk of suspending their previously bought stocks in case the issuing companies delayed disclosing their results.
Despite some of the small caps are expected to post strong performances for the quarter, investors may not rush to buy them even when cheap prices are offered as their investment could be subject of suspension, the analyst mentioned.
The priced index has a significant and important support level, which it had been able to maintain throughout the year, the analyst noted, indicating that the support level in question was at 6,540 points.
It is very important for the price index to remain above this level, as a breakout under it may send the index towards further declines towards 6,260 and 5,745, which are part of a corrective movement, El-Oun highlighted.
However, if the index managed to bounce from the previously mentioned support level, a breakout at 6,657 points will be needed and will require average volume exceeding the current daily averages seen on the bourse recently, the analyst stated.
Such an increase in turnover will boost stocks higher towards 6,800 points once more, which will be the turning point for any positive or negative movement, El-Oun said.
A breakout above 6,800 points will open the door to a further technical target near 7,091 points, which is the record high for 2017, El-Oun concluded.
Translated by: Mohamed Saad
