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PSX CLOSES IN RED AFTER THREE DAYS OF POSITIVE RUN
SUMMARY

During the week the market gained 615.81 points to remain above 49,000 to close at 49,623.81.The average volume was. 301 million share per day and market capital increased to Rs9.815 trillion. The fundamental news which dominated the market and build up the sentiments were: i) SECP and PSX involvement in regulating the brokers overstepping the legal limits and issue of margin/badla financing; ii) FTSE including six Pakistani companies in its index; iii) continuous foreign selling. There was calm on the Panama case as it has entered the stage of apex court decision.

The opening day of the week Monday started on heavy selling pressure in almost all sectors and Index lost 487.25 points to close at 48,520.75. SECP strict measures against in-house financing caused the liquidity to decrease in the market. The volume decreased to 250 million shares from 275m in last session.

The stocks closed on Tuesday on modest gain at the last trading of February. The Index inched 13.48 points to close at 48,534.23 points . The market volume again fell to 228 million shares. Banking sector weighed down on the index as it closed 0.5 percent lower.

The stock turned green in response to joint press conference by SECP and the PSX in which they issued warnings but hold back stricter action The regulator’s stance shows its lenient policy towards brokerage houses .In-house financing is a high risk areas but legally it is gray area. PSX Chairman said in 2008 the size of badla financing was around Rs50 billion compared to Rs10 billion presently. The market moved upward 457.93 points on Wednesday.

The news of FTSE including six Pakistan companies – HBL, MARI, SEARL, EFERT, FCCL and NML– in its index brought KSE-100 Index jumped 703.92 points to close at 49,696.08 on Thursday. FTSE( Financial Times Stock Exchange ) is a London-based provider of indexes ,which helps international investors track their funds at bourses worldwide. The volume during the day too climbed to 398.532 million as compared to 234.954 million a day earlier.

The bullish momentum during the last two days subsided on Friday as the Index lost 72.27 points to close on 49,623.81 points . Volatility was seen in the market . The major drag to the KSE-100 Index came from Engro 1.19pc, ISL 3.5pc, DGKC 1.41 pc, LUCK 0.67pc and FCCL 1.98pc taking away 84 points. The volume declined to 392.029 million shares.

PARTICIPANTS/ACTIVITY

On average shares of 407 companies were traded . Of these 196 were gainers and 198 were losers and 13 remained unchanged.

Foreigners were net seller by $32.81m during the week; companies were net buyers $2.88m, Banks were buyers $13.11m; Mutual fund net seller $7.67 and individuals net seller $10.10m.

Volume leaders during the week were: Lotte Chemical 146m; Aisha Steel Mills 78m; K-Electric 74m; Azgard Nine 66m; Silk Bank 34m and Bank of Punjab 34m; TRG Pakistan 33m and Power Cement 32m.

TRIGGERS

– Market (SECP, PSX & Brokers) made progress/development
– Margin Financing Products
– FTSE in its semi-annual review included six Pakistani stocks
– Release of CPI to 4.2 percent in February
– Potential entry of German truck maker into Pakistan Automotive industry
– Automaker resent the SBP move to impose 100 percent cash margin requirements
– The foreigners remain seller of $32.81m during the week

FUTURE OUTLOOK

The Index technically can approach all-time intraday high of 50,887 which if broken can touch 51,934. Any downward move can bring the Index to 49,446 level . The RSI has improved & MACD has taken an upturn supporting positive move.

The expected result of Panama next week has to be watched.

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

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