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VOLATILE TRADING FAILS TO PUSH KSE-100 INDEX ABOVE 50K MARK
SUMMARY

Volatile trading was witnessed during the week and the KSE-100 Index oscillated between intraday high of 50,195.73 and low of 49,630.04 during the week. The KSE-100 Index during the week failed to cross psychological barrier of 50,000 and sustain it .The average volume during the week increased to 414m shares a day and paid up capital declined to Rs9.881 trillion

The market opened on a positive note on Monday on the back of local and foreign buyers support who were net buyers during the day. The market was choppy and KSE-100 Index traded range-bound over 200 points. Banking sector led the gains in the market with HBL (up 1.25 %) and UBL (up 0.95 points). The KSE-100 Index gained 74.21 points to close at 49,630.04.

The positive momentum continued on Tuesday as the Index gained 229.35 points to close at 49,859.39. The year-end earnings and pay-out kept financial sector in limelight. The banking sector emerged again as the day’s top performer with UBL alone contributing 90 points to the Index. SNGPL and SSGCL hit their upper limits after both the gas utilities announced to build second pipeline from the south to north of the country. Trading volume increased to 397 million shares from 281 million on Monday.

On Wednesday KSE-100 Index closed little changed after trading in narrow range to close at 49,874.96 with gain of 15.57 points. The volume jumped to 498 million shares . Steel sector came to limelight as NTC imposed anti-dumping duties on Chinese imports of galvanized steel for a period of 5 years. International Steels, Int’l Industries and Aisha Steel closed at their upper limit.

A mixed trend was seen on Thursday and KSE-100 Index kept oscillating between 50,195.73 and 49,784.33 to close finally at 49,908.15 with gain of 33.19 points. The volume continued rising to record 538.91 points.

Volatility continued on Friday when the Index fluctuated between intra-day high of 50,093.38 to low 49,925.08 gaining 16.93 points. The volume dropped to 354.87m shares. Engro and Dawood Hercules contributed 60 points to the Index as investors anticipated better results.

PARTICIPANTS/ACTIVITY

On average shares of 424 companies were traded. Of these 207 were gainers and 198 were losers and 19 remained unchanged.

Foreigners were net buyer by $5.77m during the week; companies were net seller $13.54m, banks were seller $0.16m; mutual fund net buyer 9.4 $12.24 and individuals net seller $2.47m.

Volume leaders during the week were: Lotte Chemical194m; Power Cement 120m; Dost Steel Mills 83m; Bank of Punjab 76m; TRG Pak Ltd 74m; Aisha Steel Mills Ltd 54m; Engro Polymer 31m; Media Times Ltd 23m and Pak. Int. Bulk 10m.

TRIGGERS

– Foreigners coming back on the buying side $5.77m during the week.
– PSX to probe officials’ negligence after broker’s flight.
– National Assembly clears Companies Bill 2017.
– Local cement dispatches in the first seven months of 2016-17 increased 9.52% year-on-year to 19.61 million tons.
– Remittances slipped to $10.9 billion in 7 months (July-Jan).
– National Tariff Commission (NTC) imposed definitive anti-dumping duties on imports of galvanized steel coils and sheets in the range of six to 41 percent.

FUTURE OUTLOOK

A break above 50,195.73 could bring Index upto 50,887. The downside will find support at 49,784. The RSI has improved while the Stochastic Oscillator has generated a ‘Sell’ signal supporting a neutral view.

If volatility persists, best strategy could be to accumulate new positions on dips in the market.

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

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