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KSE-100 CREATES HISTORY BY CROSSING 50,000 PSYCHOLOGICAL BARRIER
SUMMARY

The week ended saw two record breaking landmarks for PSX: 1) KSE-100 Index broke the psychological of 50,000 on Thursday to close at 50,192.36 and 2) The paid up capital of KSE crossed Rs10 trillion mark to close at Rs10,003 trillion of Friday close. It was the week when the average volume too rose to 523.40 million share per day from 389 million last week.

The continuous trend of rising Index began in November last year. The possible attributes according to some market analysts are underlying companies prospective earnings and growth and more to the liquidity that swamps the market .This week too, the foreign investors were net seller to the extent were $13.60mn but the Mutual Fund provided the liquidity as they were buyer of $27.56mn shares.

On Monday, Pakistan equities continued their upward trend as the benchmark KSE-100 Index settled at a new record higher near the coveted 50,000 point level to close at 49,876.18 gaining 511.35 points. The trading volume jumped to 600 million from 460 million shares traded on Friday. K-Electric had 36pc of the days total volume.

KSE-100 Index failed to sustain gains above 50k level and closed on Tuesday at 49,968.92. There was volatility in the market and the trading volume declined to 509 million shares. Auto sector staged a retreat amid presumably stronger yen. Profit-taking was witnessed in HCAR.

There was profit-taking on Wednesday. The stocks fell 212 points to close 49,756.27 points. The volume too declined to 459 million shares. The pressure was witnessed in later part of the day due to future rollover, which led the market to close in negative.

On Thursday, stocks sets new record and closes above 50,000 for first time at 50,192.36. Market cap too hits record Rs10 trillion. Analyst are looking at foreign portfolio investment of around $300-500m following the reclassification of the PSX into MSCI emerging market category from frontier markets in May this year. The receipt of $100m by stockbrokers for the sale of 40pc strategic shares and 20pc stock in public offering to local investors is also reckoned to make into the equity market.

On Friday, stocks fail to hold 50k level and profit-taking slides KSE -100 Index by 228.59 points to close at 49,963.77. The profit-taking was seen in overbought stocks across the board. The investors seemed cautious in banking scrips ahead of the release of State Bank’s Monetary Policy to be announced on Saturday. The average volume during the week was 523.40mn share and paid up capital stood at 10 trillion. During the week Index gained 599 points.

PARTICIPANTS/ACTIVITY

On average shares of 431 companies were traded. Of these 212 were gainers and 205 were losers and 14 remained unchanged.

Foreigners were net seller by $13.60m during the week; companies were net sellers $2.44m, Banks were seller $11.58m; Mutual fund net buyer $27.56m and individuals net seller $0.43m.

Volume leaders during the week were: K-Electric 550m; Japan Power 125; TRG Pak 101m; Aisha Steel Mill 95m; Dost Steel Mills Ltd 73m; PIAC (A) 42m; Faysal Bank 39m; Lot Chem27m; Bank of Punjab 21m and Pak Elektron18m.

TRIGGERS

– ADB to provide $196mn for post floods highway rehabilitation project.

– Govt. selling off 5% stake in OGDC.

– SECP seeking amnesty scheme for offshore company owners.

– Sindh High Court issuing a status quo order preventing the holding of EOGM of NIB Bank to approve Scheme of Amalgamation with MCB Bank.

– Inauguration of Fauji Food Ltd.

– An objection note received by the NEPRA said KEL owes Rs51 billion to NTDC and Rs67 billion to Sui Southern Gas Company in unpaid liabilities, which need to be cleared before approving the shares transfer to Shanghai Electric.

FUTURE OUTLOOK

The uptrend has resistance at 50,452 and 50,852 and support at 49,452. A better strategy would be to sell on strength.

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

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