CAIRO: The “buy on rumors sell on facts” sentiment and reports about low turnout stood behind the Egyptian Exchange’s decline on Monday, the first day of Egypt’s presidential election, technical analysts said Tuesday.
Despite expectations that the benchmark index EGX30 could continue its rally towards the highest level since 2008, the index sagged 0.3 percent to end at 8,736 points Monday, failing to maintain morning surge at 8,812 points due to profit taking.
The Egyptian Exchange (EGX) suspended its session Tuesday after the Cabinet announced an official vacation amid efforts to allow citizens to cast their votes on the second day of the presidential election.
“EGX30 added around 50 points during Monday’s early trade session but then the index reversed its uptrend due to short-term trader speculations to take immediate profits, following the market surge over upbeat investor sentiment on the presidential election during the last period,” technical analyst Walid Helal told The Cairo Post Tuesday.
Helal added that EGX was likely to continue its downtrend on Wednesday to approach its new support level at 8,600 points. “Then the index will rebound and resume its rally, adding that the voting process is just a step towards announcing Egypt’s new elected president, a step that EGX is greatly expected to cope with positively.”
Ihab Saeed, head of technical analysis at Osool ESB Securities, attributed the decline to media reports on low turnout from citizens on poll stations after the mid-session.
“Reports about low turnout dramatically affected investors’ upbeat sentiment, namely local institutions, leading the benchmark end in the red, however, it hit its highest level since August 2008,” Saeed told The Cairo Post.
The analyst also expected EGX to note the same decline on Wednesday’s early trade over profit taking, and said the index would then rebound if the election witnesses a greater turnout Tuesday.