FTSE All-Share Index (.FTAS) Market Round-Up

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a positive note and post that traded in a range for most of the week. It broke a downward trendline resistance level at 3850 on March 09, 2021 and made a high of 3858.46. The index settled at 3851.15 with an overall weekly gain of ~2.11 percent for the week ending March 12, 2021. The recent week started with a marginal negative tone as prices face stiff resistance at the 3900 level; however, any breakout above the 3900 level may generate a fresh upside rally in the index. On the weekly chart, RSI (14-period) is trading at ~61 levels and seems supportive of an upside movement. Prices are well placed above 21-period and 50-period SMA, providing strength to the index.

The lack of any major economic event during the last week resulted in the sideways movement for the index during the latter half of the week. This week, the monetary policy and official bank rate decision by the Bank of England will further provide direction to the market.

Global Markets Wrap-Up

Wall Street witnessed a sharp bullish movement last week and both benchmark indices closed with significant gains. S&P 500 made a new lifetime high and settled at 3943.34 with an overall weekly gain of ~2.64 percent while NASDAQ Composite Index settled at 13,319.86 with an overall weekly gain of ~3.09 percent for the week ending March 12, 2021.

The indices reacted to the employment data released by the US Bureau of Labor Statistics in the latter half of last week. As per the data, the number of jobless claims declined last week to 712,000 from 754,000 in the prior week and impacted the market positively.

Having understood the US market performance over the past one week, taking cues from major global news, and based on our technical analysis of the FTSE All-Share Index (.FTAS) for the upcoming week, now let us have a look at the two FTSE-listed stocks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Fresnillo PLC (LON: FRES) and Bakkavor Group PLC (LON: BAKK) for the next 2-4 weeks duration:

Fresnillo PLC 

Fresnillo PLC (LON: FRES) is a precious metals and mining company incorporated in the UK and headquartered in Mexico City. The company is the world’s largest producer of silver from ore and the second-largest gold miner in Mexico. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart) 

FRES' prices are trading in a downward channel formation for the past 7 months and recently started to move upside from the lower band of the pattern. For the short term (2-4 weeks), we can expect the continuity of upside momentum in it and prices may test the next important resistance level of GBX 1193.50. Any further movement above GBX 1193.50 accompanied by volume may extend buying in the stock.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~42 levels and indicating the start of a new uptrend for the stock. The weekly volumes are showing an increasing trend and seem supportive of an upside movement. However, the 21-period and 50-period SMAs are above CMP and acting as the immediate resistance for the stock.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Fresnillo PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Fresnillo PLC is looking technically well-placed on the chart and we have a ‘Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite on upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:

Bakkavor Group PLC

Bakkavor Group PLC (LON: BAKK) is an international food manufacturing company headquartered in London, UK. The company provides freshly prepared foods (FPF) such as bread and bakery, fresh-cut fruits and vegetables, sandwiches, etc. in the US and China. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

BAKK's prices broke the major resistance level of GBP 94.29 on March 09, 2021, and after that prices are sustaining above the breakout level. Prices started to move upside after almost 2 months of consolidation and for the short-term (2-4 weeks), we can expect further upside movement in it. The next important resistance level appears at GBX 138.50 and prices may test that level in the coming sessions. 

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~70 levels and indicating a positive trend in the stock. The weekly volumes are showing an increasing trend and seem supportive of an upside movement. The CMP is above the 21-period and 50-period SMA, further providing strength to the prices.

Financial Summary:

Summary of the Key Financial Metrics for the past four years for Bakkavor Group PLC is as follows:

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Bakkavor Group PLC is looking technically well-placed on the chart and we have a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite on upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. The summary of our recommendation is as follows:

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the FTSE All-Share Index and listed stocks’ prices.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.60:1.00), however, returns are generated within 2-4 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within short investment duration. Investment recommendations provided in this report are solely based on technical parameters, and fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, and social and political instability risks etc.

Entry Price: For the given recommendation(s), Entry Price is assumed be at or above a certain level. However, a slight deviation on either side in the ‘Entry Price’ can be considered depending upon the potential expected or indicated.

Note: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 50% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 50% of the Target 1. 

Risk Reward Ratio: Risk reward ratio is the difference between an entry point to a stop loss and profit level. We suggest ~60% Stop Loss of the Target 1 from the entry point.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is March 15, 2021.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

GBP: British pound sterling

GBX: British pence sterling

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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