On Friday, the correction continued on the Russian stock market. In the absence of new buying incentives and the inability of the market to gain a foothold above 2,300 points, they stimulated profit-taking on pancake positions in Russian stocks. As a result, the Moscow Exchange index fell by 1.2% at the end of the session, retreating slightly below 2,270 points.
Among the sectors, we note the pressure on metallurgists, where the decline was led by Mechel, TMK and MMK, which lost 3.9%, 3.6% and 3.2%, as well as financial companies, where Sovcombank and AFK Sistema were under significant pressure, losing more than 3%.
Oil and gas companies, against the background of a moderate decline in oil prices, showed multidirectional dynamics. The shares of Bashneft (-5.2%) and Russneft (-4.9%) became outsiders, while Surgutneftegaz and Gazprom Neft added more than 1%. We also note CYANIDE among the market leaders (+2.5%), where growth continues to be supported by buybacks.
As part of weekend trading, against the background of improving expectations on geopolitics, the Moscow Exchange index was once again able to come close to the level of 2,300 points, which acts as the nearest resistance, and is the level of a 38% correction to the 18-week wave of decline.
Today, we expect further consolidation of the market under this mark with attempts to go up. This week, with the support of geopolitical expectations from the news flow, as well as an improvement in the situation in oil prices, the Moscow Exchange index may gain a foothold above 2,300, which will open the way for the market to reach 2,400 points.
If hopes for an improvement in the situation on the geopolitical track do not materialize, the corrective decline in the Moscow Exchange index may resume, and by the end of the week it will retreat to the area of 2,150 - 2,200 points, playing off investors' concerns about a further slowdown in the economy and a pause in the cycle of key rate cuts.
Given the continuing risks to the market from fundamental factors, the impact of which may lead the market to new annual lows in the medium term, we believe that the formation of medium-term portfolios looks premature, and attempts to open speculative positions with the expectation of continued rebound carry increased risks, which should be compensated by close "stops".
Bogdan Zvarich, Head of Banking and Financial Market Analysis at PSB.
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