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PANAMA CASE JITTERS CONTINUE AS NEGATIVE SENTIMENTS AND SKEPTICISM KEEP INDEX FALLING
SUMMARY

Uncertainty prevailed during the week over the result of Panama case till the last day of the week. The investors were cautious as the volume during the week declined by 225 to an average of 185m from 236m last week. The KSE-100 Index shed 782 points during the week and the paid capital declined to Rs9.531 trillion from Rs9.697 trillion last week.

The first session of trading on Monday, started with 7-month low volume of 133 million shares. The Index lost 536 points to close below 49,000 psychological level at 48,655.72. The note able feature was the renewed interest in steel sector generated by the news of LHC declining to grant stay order in favor of steel importers. Aisha Steel was the volume leader with 10.625 million shares.

PSX remained bearish on Tuesday. KSE-100 share Index ended with a fall of 116.66 points. The pressure of falling oil prices along with ongoing Panama case kept investors on their toes. Growing uncertainty regarding Securities and Exchange Commission of Pakistan (SECP) move against brokers mounted tension at the local bourse. The Index closed at 48,539.06.

Stocks kept on dropping for third day on Wednesday. The stocks shed 233.23 points to close at 48,305.83. Volume leader K-Electric (-4.29%) and Sui Southern Gas Company (-1.09%) closed in negative following a news report that Abraaj Group would not be able to conclude the power utility’s deal with Shanghai Electric Power within the stipulated time frame.

On Thursday KSE-100 Index went into free falling hitting the lowest point of this year at 47,774-a decline of 531 points. Company and foreigners buying in the final two hours primarily in blue chips helped to recover and close with trimmed losses. The KSE-100 Index closed at 48,289.66 with a decline of 16.17 points.

Market opened on Friday on a positive note where intraday high went up to 48,727.44, which finally closed at 48,409.35 with a gain of 119. 69. The volume too improved to 213 million shares from 181 million shares on Thursday. The banking sector build up the rally with bigger banks HBL (+0.54%) and UBL (+1.01%) drove the index up.

PARTICIPANTS/ACTIVITY

On average shares of 386 companies were traded. Of these 140 were gainers and 230 were losers and 16 remained unchanged.

Foreigners were net seller by $11.0.8m during the week; companies were net buyers $16.89m, Banks were seller $3.88m; Mutual fund net seller $2.35m and individuals net seller $4.45 m.

Volume leaders during the week were: K-Electric 95m; Bank of Punjab 56m; TRG Pakistan 36m; Sui Northern Gas 29m; Power Cement 28m; Aisha Steel Mills 22m; Pak Refinery 19m; Habib Bank 16m; Dost Steels Mills Ltd and Fauji Cement 9m each and Engro Fertilizer 8m.

TRIGGERS

– Release of FDI numbers (+6% YoY to $1.3 billion 8MFY17).

– Receipt of CSF inflows ($200m).

– HBL, MARRI, SEARL, EFERT, FCCL and NML to be added to FTSE Global Equity Index series Asia Pacific.

– SECP accelerates efforts to curb misconduct market abuses and financial crimes of defaulter brokers.

– T-Bills auction fetching Rs284 billion for the government.

FUTURE OUTLOOK

Volatility is expected to continue. The RSI has improved while the MACD is heading down supporting a neutral view. The support and resistance are at 47,950 and 48,632 respectively.

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

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