CAIRO: The Egyptian Exchange (EGX) plunged this week, and market capitalization shed around 14 billion EGP ($2 billion.)
“The market plummeted after Saudi Arabia rejected Sunday to cut its oil output despite the remarkable increase in supply which triggered oil to the lowest level since July, 2009 to hit $63 per barrel Friday,” Ahmed Abdel Rahman, chief technical analyst at Helwan Securities, told The Cairo Post.
Abdel Rahman added that panic controlled local traders at Egypt’s market Tuesday, predicting that the EGX will likely resume its downward wave which may lead the benchmark index toward 9,000 points Sunday.
“A beach below 9,000 points may lead the index to 8,800 points. The market will trade sideways with a downward tendency until 2014-end as global stock markets usually witness some dips ahead of the New Year and Christmas holidays since traders prefer to save some liquidity,” the analyst detailed.
Osool Securities Brokerage technical analysis head Ehab Saeed told The Cairo Post that “the benchmark index EGX30 managed early this week to approach previous resistance level at 9,600 points but it failed to breach above its target and dipped towards 9,200 points.”
Saeed attributed the decline to selling pressures, mostly on blue chips, “Namely the market bellwether which failed to penetrate its previous peak near 51.75 EGP, slipping toward 49.15 EGP at Thursday’s close.”
According to the analyst, the small and mid-caps index EGX70 witnessed sharp slides and failed to sustain above its final support level at 623 points, ending Thursday at 613 points after most leading shares were hammered by selling pressures on Tuesday and Thursday.
Total trade value and volume saw a significant rise this week ranging between 770 million EGP to 990 million EGP. Meanwhile, a significant hike to nearly 992 million EGP on Tuesday raised the daily average to 885 million EGP compared to 745 million EGP the week before, Saeed said.
“High turnover with a sharp slide is an indicator that the market is dominated by the bears,” said the analyst.
The EGX30 will focus on its support of (9,100-9,050) points. “Breaching below this level may drag the index lower toward 8,800 points,” Saeed said.
Saeed predicted the EGX70 may extend its losing streak and slip toward (595-600) points where it is likely to stop its loss.