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INDEX CROSSES MILESTONE OF 49,000 MARK, NEW YEAR BEGINS ON STRONG POSITIVE NOTE
SUMMARY

The week started with a bang on Monday crossing 48,000 levels while it closed on Friday creating a milestone of closing above 49,000 levels to 49,038.23, an all-time new peak. During the week, the fundamental news of Panamagate case, the crude oil prices, the announcement of inflation number, the expectation of announcement of textile package and positive development in steel sector kept the market moving.

The KSE-100 Index gained 2.6% WoW or 1231.26 points . The average volume jumped to 408 million shares from 286 million last week. The capitalization too increased to Rs9.795 trillion.

On Monday, Pakistan equities welcomed the New Year in grand fashion by crossing the psychological barrier of 48,000 to close at 48,240.28 an increase of 433.31 points. Fertilizers initiated the early support to the Index on the positive news of confirmation of reduction in gas prices. Steel makers like Amreli Steel, Crescent Steel and Mughal Iron & Steel also closed at their respective upper price limits.

The index came close to 49k on Tuesday as it closed at 48,827.55 gaining another 587.27 points. Global oil prices climbed to reach $55 a barrel for the first time since July 2015 after Kuwait cut output. Index heavyweights the Oil and Gas Development Ltd, Pakistan Petroleum and Pakistan Oilfields rose 2.7pc, 2.71pc and 2.51pc respectively. The volume too surged to 501 million compared to 377 million on Monday.

The New Year’s bullish rally finally resisted at 49,000 levels on Wednesday and the investors decided to book profit coupled with the on-going Panama case. The stocks closed lower amid pressure in oil stocks after WTI crude prices fell sharply near to $52/barrel. The Index shed 122.56 points to close at 48,704.99.

The Pakistan Stock Exchange (PSX) remained range bound on Thursday . The KSE-100 Index kept oscillating between 48,933.71 intra-day high and 48,646.20 points intra-day low level. Investors remained cautious and Index closed almost flat at 48,713.67 gaining 8.64 points. Slight recovery was seen in E&P sector as crude oil prices traded above $53/bbl. The ease in CPI inflation led to favor to leverage stocks in auto, steel and cement sectors.

The beginning of rally on Thursday was extended on Friday as the KSE-100 Index gained 324.60 points, breaking psychological barrier of 49,000 to close at an all-time high 49,038.23 levels.

The textile sector gained grounds on the expectation of government announcement of the textile package . Nishat Mills, Gul Ahmed Textile Mills and Nishat Chunian closed at their upper limit. Dost Steel notifying commencement date of its operations as of May 2017 and rumors of significant s discount in steel sector kept the volume high for Dost Steel 51 million and Aisha Steel 31 million on Friday.

PARTICIPANTS/ACTIVITY

On average shares of 424 companies were traded. Of these 224 were gainers and 170 were losers and 21 remained unchanged.

Foreigners were net seller by $2.03m during the week; companies were net buyers $3.65m, Banks were seller $7.68m; Mutual fund net buyer $10.18m and individuals net seller $5.02m.

Volume leaders during the week were: Dost Steels Ltd 199 m; Aisha Steel Mill 98m; K-Electric Ltd 86m; Pak Elektron 45m; Azgard Nine 42m; Bank of Punjab 35m; Summit Bank 23m; Engro Polymer 21m; Fauji Cement 15m; PTCL 14m; Engro Fertilizer 11m and Pace (Pak) Ltd 10m.

TRIGGERS
  • Dec ’16 CPI clocking 3.7%
  • Tax collection shortfall crossing Rs127 billion, possibility of government imposing taxes
  • SBP unveiling Prudential Regulation for infrastructure project financing
  • ECC considering reduction in prices of imported urea
  • PSO receivable surging to Rs219 billion
  • K-Electric reportedly shelving coal power conversion project on unviable tariffs
FUTURE OUTLOOK

The technical indicators at this level are mixed. It is better to remain cautious at such high level as correction is due .The daily hearing of Panama case in Supreme Court may bring a quick result which will have impact on the market.

RAEES UDDIN KHAN – Research & Development Institute of Securities Management & Research Karachi

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