A state of optimism at the performance of the Egyptian Exchange (EGX) is dominating investors’ dealings. This comes despite the warnings of capital market experts that this optimism should be cautious, due to market fluctuations and the possibility of a bounce down.
In this week’s trading, the EGX is testing the chances of following through, with high trading volumes, on its upward trend to go beyond the 11,500 point resistance level. This follows the benchmark index EGX30 falling just short of this level in previous trading sessions.
Mohamed Othman, head of the Technical Analysis Department at Pharos Holding, said, “Currently, the Index [EGX30] is approaching the major resistance area of between 11,420 and 11,500 points.”
He added, “In case of a successful breach above 11,500 points with relatively high volumes, and an improvement of the market breadth, this will trigger a bullish signal and pave the way for a further upward move to reach 12,000 points.”
Meanwhile, the current market conditions are improving, however Pharos Holding prefers to adopt a conservative discipline as the index is trading near major resistance.
In this regard, those who are heavily invested in the market are advised to realise some profits for trades that achieved targets, while minoring new buying dip chances in the outperforming shares.
Othman added that the first support area to watch lies between the 11,100 and 11,200 points levels.
EGX indices recorded collective gains during last week’s transactions, supported by the purchases of Arab and foreign investors.
The EGX30 rose by 4.5% to reach 11,453 points, whilst the EGX70 EWI for small and medium sized companies rose 4.7% to 2,245 points. The EGX100 EWI also increased by 4% to 3,252 points.
The market capitalisation rose 2.68%, equivalent to EGP 17.7bn, to close at EGP 677.8bn.
The total value traded recorded EGP 23.6bn, while the total volume traded reached 3.091bn securities executed over 259,000 transactions last week. For the week before last, the total value traded recorded EGP 9.1bn, while the total volume traded reached 1.744bn securities executed over 159,000 transactions.
Stocks accounted for 34.85% of the total trading, while the remaining 65.15% went to bonds over the last week.
Egyptians carried out 81.2% of the trading in listed stocks after excluding deals during the period. Foreigners accounted for 11.4%, while Arabs had 7.4%.
Foreigners and Arabs were net buyers, recording EGP 387.6m and EGP 100.3m, respectively, after excluding deals in listed stocks.
Since the beginning of the year, Egyptians represented 82.4% of the value traded in listed stocks after excluding deals.
Foreigners accounted for 10.6%, while Arabs captured 7.0%. Foreigners were net buyers by EGP 484.1m, and Arabs were net buyers by EGP 101.7m, after excluding deals in listed stocks during this year since started.