Market was at 9,781 level when I posted my first article on this blog on July 07, 2010. Last Friday on 3 December, 2010 KSE 100 closed at 11,400. This is equivalent to around 16.5% return and this return is excluding dividends and if you roughly include dividends of let us say just 3% (however dividend return might be slightly higher for most of the shares that I recommended) then the total return becomes around 20% and this is just in six months period. Isn’t it wonderful? Market has certainly performed brilliantly during this period. However if you are following my blog then it must be in you knowledge that my upper limit for market is 11,200-11,500 and this is exactly where market has reached now. I would suggest profit taking at this level and if you don’t want to book your profits then at least don’t buy at this level if you have any excess cash. You should have 50-65% cash in hand right now. Wait for the market dip and then buy. There is no fundamental change and I believe 11,200-11,500 is a level where market does not look very attractive. For short term, market is facing following issues that could put the market in a declining zone:
- We still don’t know about the leverage product, it’s characteristics and it’s time of implementation.
- RGST is a hot issue and we don’t know whether government will be able to impose it or not.
- Both the above-mentioned issues create uncertainly and I hope you know that very well “Market hates uncertainty”.
- Muharrams are just there and there are very serious concerns of law and order during this religious event.
- Because of Christmas season, foreign investor will be almost absent from the market and remember foreign investment has been the key driver of market for the last one and a half year.