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The feeling in the market is that the past few days' declines were overdone and that major indices are now approaching important technical levels, which are providing some short-term support.
The next 48 hours could be a decisive indicator of the market's future direction.
The All-share index was at one stage 0.05% higher at 49 344 points, while the Top 40 index also improved by 0.05% to 44 234. The Financial index was 0.04% higher, the Industrial index gained 0.12% and the maligned Resources index improved by 0.39%.
The initial drop in the market was in reaction to world markets which were spooked on Monday by the scope of protest action in Hong Kong, which could have a major influence on events in China at a stage where there are already concerns about the state of the Chinese economy.
The situation in China is one of the reasons why South African resources stocks in particular have been under severe pressure lately, with the share prices of the producers of basic commodities dropping more than 20% in the last month.
These shares started lower again on Tuesday morning, but bargain hunters eventually came forward as analysts have been saying for a long time that resources stocks are heavily oversold.
Anglo American [JSE:AGL] improved by 1.27% to R254.59 and BHP Billiton [JSE:BHP] gained 0.58% to R315.60. Assore [JSE:ASR], which lost 35% over the last month, improved 35% to R220.89 and Kumba [JSE:KIO] gained 1.36% after losing 22.7% over the last six months.
Most of the attention is still on the Top 40 index, which fell through important support levels last week. The technical analysts of Imara SP Reid said the previous support level of 45 540 is now taking on significance as a resistance level, which should be breached first before there can be talk of continuing upward momentum.
After Monday's drop the index is now approaching the 200-day moving average which could provide some support, said Imara SP Reid in its daily Market Snapshot.
The Industrial index is the next index to approach an important support level of 58 260, which needs to hold if the first technical damage to the industrial sector charts is to be avoided.
Naspers [JSE:NPN], which owns 34% of internet giant Tencent which is listed on the Hong Kong Stock Exchange, was not influenced much by Hong Kong market turmoil. It traded 0.13% higher at R1 253.
- Fin24
