The resistance on the Moscow Exchange Index has been broken, it needs to be maintained

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Alexey Antonov, Alor Broker 17 January 2025 11:00

The Moscow Exchange index opened with an upward gap on Thursday, playing back the market growth in the evening session on Wednesday. At the end of the day, the main market indicator closed above 2,900 points, which formally means a breakthrough of strong resistance and the market's transition to the growth stage. However, yesterday afternoon, profit-taking took place. Judging by the nature of trading, there was no massive disruption of stops, of which there are probably many open around 2900. So the breakdown of the barrier does not look very convincing yet, it must be held at all costs in the coming days. It won't be easy to do that. 

Today, investors may be influenced by the Friday factor, when it's a little scary to buy in the current geopolitical reality. In addition, Western media began to talk that the new US administration is preparing "just in case" super-tough sanctions against Russia. However, opening the shorts seems (at least this morning) to be a very bad idea. A market growth of 3,000 points looks more likely than a strong decline.

Last Thursday can rightfully be called "builder's day" - developer stocks were among the growth leaders. Etalon soared by 8%, LSR – by 7.9%, Aeroplane - by 6.2%, PEAK – by 5.7%. It can be said that the sector's shares are growing on expectations that the Bank of Russia will no longer raise the key rate. But even if the regulator moves to reduce it in early summer, as the market now predicts, the easing of monetary policy will be very mild. It is unlikely that in 2026 we will enter with a rate below 16%, which means that mortgage rates will continue to be prohibitive, and the risk of massive mortgage defaults is high. Based on the above, we still do not recommend medium- and long-term investors to invest in real estate (both real and paper).

NOVATEK's shares were among the outsiders of the day, where it was reported that the company had reduced production at the end of the year. We have always liked this paper for its excellent business and high-quality corporate policy, but the sanctions turned out to be stronger. Therefore, we do not recommend choosing paper in the medium term yet, there are more interesting ideas on the market. But NOVATEK's time will come.

The sale included Aeroflot and MMK securities, which were among the best last year. There is a small profit taking going on in them. Maybe someone just doesn't have enough money for new purchases. These stocks should continue to be held and even redeemed at deep drawdowns.

The ruble closed without fundamental changes. Next week, the Russian currency will begin to receive support from the approach of the peak of the tax period, but it will traditionally be very weak for recent months. Most likely, the ruble will seek equilibrium and, in the absence of new shocks, will go sideways for several weeks.

Alexey Antonov, Head of Investment Consulting at Alor Broker 

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