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EQUITIES REMAIN JITTERY AND STRUGGLE FOR DIRECTION

SUMMARY

The stock traded for only four days in a week as it remained closed for Pakistan Day holiday on the 23rd March. The Panama case uncertainty and the expected Monetary Policy on coming Saturday kept the investors cautious with no major trigger present to move the market.

Overall the volume improved over the last week to average of 258 million shares but remained below FY17TD average daily volume of 376m showing investors nervousness. The market capitalization improved to Rs9.647 trillion compared to Rs9.531 trillion last week.

Monday started with bullish momentum as the KSE-100 Index gained 288.30 points to close at 48,697.65. This broke the losing streak of four days last week. The second half saw interest towards blue chips like HBL (+1.8pc), HUBC (+1.7), SEARL (+3 pc) and MCB (+1 pc). These added 161 points to the Index. The volume, however, dropped to 135m.

Bulls continued to dominate on Tuesday as they further added 322.56 points to close KSE-100 Index to 49,020.21. The news that NEPRA determined integrated multi-year tariff for K-Electric for seven-year period (2016-23) and reduced its base tariff to Rs12.07/unit from existing Rs15.57 a unit. HUBC closed (+0.64pc) closed positive as 1,320 MW coal-fired power plant in Hub has been commenced on Tuesday.

On Wednesday the equities retreat and the KSE-100 Index ends flat at 49,016.79 with stocks opened positive but succumbed to profit-taking soon enough before positive momentum carried the Index near the 49,150. However, investors decided to book profits in the afternoon after three successive days of gain.

The stock market fell on Friday below 49,000 points with a small decline of 45.74 points to close at 48,971.05. The Index moved in the range of plus 122 points and minus 89 points during the day. The volume, however, increased to 353 million shares, an increase of 11.3pc. Market continued to struggle for direction throughout the day.

PARTICIPANTS/ACTIVITY

On average shares of 399 companies were traded. Of these 236 were gainers and 146 were losers and 17 remained unchanged.

Foreigners were net buyers by $3.46m during the week; companies were net buyers $1.75m, Banks were seller $7.79m; Mutual fund net buyer $3.95m and individuals net seller $7.80m.

Volume leaders during the week were: K-Electric 140m; Bank of Punjab 74 m; Aisha Steel Mills 65m; Azgard Nine 61m; Power Cement 30m; Dost Steel Mills Ltd 21m; Kohinoor Spinning Mills and Pak Refinery 16m each.

TRIGGERS

– NEPRA announcing Multi-Year Tariff for KEL
– Textile exports decline 2.5% YoY
– Current Account deficit up 121% 8MFY17
– First ever ferry license issued to PNSC
– Ground breaking ceremony for Hub Power for its 1,320 mega watt coal-fired power plant.

FUTURE OUTLOOK

The investors should watch for the Panama case result expected next week although the market has already absorbed its economic aspect but some political adjustment may take place. Monetary policy decision over the weekend would likely be a non-event as most expected no change in the discount rate . Any progress on most talked about leverage product will be interesting.

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

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