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INDEX SETS HISTORIC MARK OF OVER 49,000; PROFIT-TAKING PARES DOWN GAINS
SUMMARY

It was a volatile week for PSX as KSE-100 index during the week went all time high 49,517.02 while profit-taking during the week ended stock on Friday at 49,210 a gain of 172.27 points. Two major development during the week were: i) cessation of subsidy on fertilizer (banning imported urea) followed by increased prices of local manufacturers and ii) announcement of much awaited Rs.180 billion export package of the government. The average volume increased to 488.87 and the market capitalization was Rs.9.859 trillion.

On Monday the bench mark-100 index ended almost flat as all intraday gains were wiped out as profit-taking took over. The index closed at 40,039.41 , up only 1.18 points. Profit-taking killed the momentum that was led by the textile sector on sentiment developed by package announced by the government. Political uncertainty in Panama case developed as opposition submitted evidence against ruling party.

Bears were in control of the market on Tuesday as index dipped 173.62 points to close at 48,865.79. The bearish spell owed mostly to news from the fertilizer sector as reports revealed that the fertilizer subsidy announced during FY17’s federal budget was exhausted which expected to cause fertilizer prices to rise in the future. FFC, EFERT, Fatima and FFBL declined respectively by 2.81pc, 4.99pc; 4.98pc and 3.23 pc.

Stocks bounced back on Wednesday and Index -100 climbed 505.81 points on Wednesday. Led by financial, cement and auto scrips, the Index ended at a new record high at 49,371.60. Fertilizer stocks saw revival in interest on rumors that government is going to restore subsidy on urea.

The bullish trend continued on Thursday and the benchmark KSE-100 index crossed psychological level of 49,500 to close all time high of 49,517.02. Hub Power provided major support to the market with its stock price up 4.1 percent adding 76.5 points to Index rise. The positive news of company increasing stake in planned coal-power project led to the increase.

On Friday market opened on a positive note as the index gained to make an intra-day high of +156 points but came under selling pressure during the second half where investors booked profit. Index lost 306 points to close at 49,210.5 points.

PARTICIPANTS/ACTIVITY

On average shares of 430 companies were traded. Of these 218 were gainers and 198 were losers and 14 remained unchanged.

Foreigners were net seller by $46.54m during the week; companies were net buyers $13.47m, Banks were seller $26.89m; Mutual fund net buyer $20.54m and individuals net buyer $17.76 m.

Volume leaders during the week were: K-Electric 95m; TRG Pak. Ltd 93m; Asgard Nine 77m; Pervez Ahmed 59 m; Ist Dawood Bank 51m ; Pace Pak. Ltd 44m; Pace Pak Ltd 44m; Engro Fertilizer 36m; Dost Steel Mills Ltd 34m; FDIBL 29m; SSGC 24m; Bank of Punjab 22m; Lotte Chemical 20m; Japan Power & Engro Polymer 16 m each.

TRIGGERS

– Remittances declining by 1.2% MoM to US$ 1.58 billion in Dec’16
– Foreign exchange reserve increasing by US$ 36.6 million to $23.2 billion
– PSO welcoming first vessel of improved quality low sulphur diesel
– Trade deficit widening by 22 % YoY in1HFY17

FUTURE OUTLOOK

Volatility to remain in the market as some major decision could be expected in Panama case as well as President Donald Trump to take charge as President of USA . Investors to remain cautious.

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

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