Karachi, March 05, 2021 (PPI-OT): Correction or a breather?
A strong bearish spell was witnessed yesterday where the market lost over 800 points (1.9%). The heated political landscape that formed the basis for this selloff (predominantly by Mutual Funds) is still a developing story and is expected to linger on for a few more days. Regardless, a correction may have finally surfaced. The index closed yesterday just shy of 45,300, registering a Maximum Drawdown of 3.5% from the levels seen on February 3rd.
Even if we treat yesterday’s session as an outlier and go back a few weeks, we will notice that the market was still trending south. There were talks of an impending correction given the ongoing result season and on the premise that the market had already posted admirable performance. Any further escalation on the political front could transform this dip into a full-fledged correction.
Regardless of the political views one may have, there is no denying the fact that the market’s momentum has been commendable. This can be gauged from the rising volumes and higher leveraged positions in the market. Yet, the fact remains that the main drivers of the rally have not been index heavyweights.
The power sector’s performance has been brilliant for obvious reasons so far in CY21, E and Ps have more or less kept pace with the index while Banks continue to remain clear laggards. Given the dilemma portfolio managers face in Banks and E and Ps, increasing tactical allocations in the Cement sector can be reasonably expected.