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PSX ENDS ON BEARISH NOTE BUT MANAGES ABOVE 49,000 AS VOLATILITY CONTINUES
SUMMARY

During the week Pakistan Stock Exchange (PSX) failed to find directions as choppy trading continued and Index shed 367.72 points to close at 49,007.99.

The fundamentals, which built up sentiment for the market were the Panamagate case, future contract roll-over, the security issues, flow of corporate results, stringent compliance measures taken by SECP and continued foreign selling.

The week saw the decline in average volume to 321.7m and paid up capital to Rs9.704 trillion and the Index declined by 0.74%.

The market opened on Monday on a bearish note. The market lost 446.59 points to close at 48,929.12. It was the beginning of future roll-over week. Volatility prevailed in the first half of trading session where as heavy profit-taking was witnessed in the second half of the day. Over all there was dull activity and the volume declined to 344m from 373m last session. Beside roll-over week security issues and Panama hearings dragged the market.

Institutional buying helped on Tuesday as Index recoup 85.97 points to close at 49,015 .09 points. Mutual Funds were buyers in the market to the tune of $10.30m. OGDC rose 1.40pc, TRG 4.78pc, HUBC 1.11pc, UBL 0.73pc and BAFL 3pc added 106 points.

The market opened on Wednesday on positive note reaching an intraday high of 316 points but the news of SECP handing over a broker and investigation of two defaulter broker to NAB brought the market down by 33.44 points to close at 48,981.65.

It was a wild swing trading on Thursday as the Index went down around 500 points below 48,500 but at the end of a session recovered to close at 49,062.26 taking a gain of 80.61 points over previous day. A bomb blast in Lahore and uncertainty in Panama case aggravated the situation. The volume fell by 30pc to 266 million shares.

The last day Friday also saw a see-saw ride as a positive open was followed by an over 300 points fall during the afternoon session to sustain 49,000 figure to close at 49,007.99, a loss of 54.27 points. Bank Alfalah (BAFL-5%) contributed most to losses with stock hitting the lower price as the bank completely skipped dividend and disappointed investors. Nishat Chunian also closed at its lower price limit on no dividend announcement.

PARTICIPANTS/ACTIVITY

On average shares of 421 companies were traded. Of these 137 were gainers and 266 were losers and 18 remained unchanged.

Foreigners were net seller by $11.35m during the week; companies were net buyers $10.68m, Banks were seller $6.26m; Mutual Fund net buyer $26.25m and individuals net seller $36.2m.

Volume leaders during the week were: K-Electric 152m; Aisha Steels Mills 106m; Power Cement Ltd 102m; TRG Pakistan 45m; Dost Steels Mills Ltd 36m; Sui South Gas 32m; Azgard Nine 19m; Dewan Cement 17m; Bank Al Falah and Bank of Punjab 16m each and Ghani Automobile 14 m.

TRIGGERS

– Security concern due to terror attack.
– Progress in Panama case.
– Feb future roll-over week.
– Bestway Cement announcement with Dewan Cement for acquisition of Hattar plant Sui South Gas company.
– Increase in current account deficit to $4.71 billion in 7MFY17.
– PSX to launch derivatives.
-Textile export declined by 1.3%
– Hascol planned to develop LPG terminal at Port Qasim.

FUTURE OUTLOOK

The market is expected to trade volatile with news flow from court proceedings guiding direction .The institutional flows both local and foreign may also determine the tone of the market. The support and resistance seemed to be at 48,658 and 49,470.

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

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