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

Last week, the benchmark FTSE All-Share Index (.FTAS) started on a flat note and made a high of 3884.54 on March 16, 2021. However, during the latter half of the week, all its earlier gains erased due to profit booking from higher levels and the index settled at 3824.92 with an overall weekly loss of ~0.68 percent for the week ending March 19, 2021. The recent week started on a marginal positive tone and the prices are still hovering around a downward sloping trend line breakout level. On the weekly chart, RSI (14-period) is trading at ~60 levels and seems supportive of an upside movement. Prices are well placed above 21-period and 50-period SMA, providing further strength to the index.

The market reacted positively to the data published by the UK’s Department of Health and Social Care on March 17, 2021 regarding the COVID-19 vaccination status. As per the data, 95% of people aged over 65 and more than 25 million people in the UK have been vaccinated with the first dose of the COVID-19 vaccine so far. However, as per the Bank of England’s monetary policy summary and minutes released on March 18, 2021, the Monetary Policy Committee (MPC) voted unanimously to maintain the bank rate at 0.10%.

Global Markets Wrap-Up

Last week, Wall Street witnessed profit booking from the higher levels and both benchmark indices ended in red. S&P 500 settled at 3913.10 with an overall loss of ~0.77 percent while NASDAQ Composite Index settled at 13,215.24 with an overall loss of ~0.79 percent for the week ending March 19, 2021.

Market fell due to an increase in 10 Years US Treasury yields to its 14-month high of 1.732%. The employment data released by the US Bureau of Labor Statistics further acted as the catalyst for downside movement. As per the data, the US weekly jobless claims number increased to 770,000 from 725,000 the prior week. Besides, a sharp downside reaction in crude oil prices also urged sell-off amid investors.

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 stock picks from the technical standpoint. Noted below are our recommendations based on generic insights, entry price, target prices, and stop-loss for Serco Group PLC (LON: SRP) and Man Group PLC (LON: EMG) for the next 2-4 weeks duration:

Serco Group PLC 

Serco Group PLC (LON: SRP) is a UK-Based public service provider, headquartered in Hampshire, England. The company provides services to sectors including transport, immigration, Health, Defense, Justice, etc. to the UK government and regional governments. Noted below are the key price indicators for the stock:

Price Action Analysis (on the Weekly Chart)

SRP's prices are trading in rising tops and rising bottoms formation and showing an upside trend for the stock. Prices broke an immediate resistance level of GBX 142.40 in yesterday's trading session and closed around the breakout level. For the short term (2-4 weeks), we can expect further upside movement in the stock, and it can test the major resistance level of GBX 171.65 by an upside. Any decisive breakout above GBP 171.65 level coupled with the volume may extend buying in the stock till GBX 189.00 level.

Technical Indicators Analysis (On the Weekly Chart)

On the weekly chart, RSI is trading at ~62 levels and indicating a positive trend for 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 support for an upside movement.

Financial Summary:

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Serco Group 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:

Man Group PLC 

Man Group PLC (LON: EMG) is an investment management company that manages portfolios for its clients. The company manages funds for institutional and private investors worldwide. The company is dealing in equity, commodities, real estate, currency, credit, and volatility markets.

Price Action Analysis (on the Weekly Chart)

EMG's prices were trading in a descending channel formation for the last 2 years and broke the channel by an upside in January 2021. Recently prices started to move upside after taking the support of an upper band of the pattern and for the short-term (2-4 weeks), we can expect further upside movement in it. The next important resistance level appears at GBX 197.50 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 ~69 levels and indicating a positive trend for the stock. The weekly volumes seem supportive of the upside movement. The CMP is above the 21-period and 50-period SMA, further providing support for an upside movement

Financial Summary: 

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

General Recommendation:

As per the above-mentioned price action and technical indicators analysis, we can conclude that Man Group PLC is looking technically well-placed on the chart and considering the stock is trading near its 52-week high, we give a ‘Speculative Buy’ rating on the stock. Investment decision should be made depending on an investors’ appetite for 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 22, 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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