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STOCKS MAINTAINS GLOOMY OUTLOOK AHEAD OF PANAMA CASE VERDICT

SUMMARY

It seems that delay in announcing the decision of Panamagate case and subsequent development on political front by the two big political parties creating more suspense and anxiety among the stock investors and the market has failed to find the direction.

KSE-100 Index remained bearish during the week and shed 816 points during the week to close on Friday at 48,155.93. The average volume too declined by3.5% to an average of 248.64 million shares. The market capital too declined to Rs9.594 trillion from Rs647 trillion.

The stock market fell on Monday by 290.89 points and overall volume also took a hit as it declined to 238 m from 353m last Friday .The KSE-100 index closed to 48,680.16. Stocks opened slightly positive but then slipped to red as investors staying on sidelines after weekend media reports speculating that much awaited verdict of Panama case is only days away. Pak Suzuki Motor Company(-1.57%) , in the automobile sector lost value following news that the automobile company may roll back its $460 million expansion plan if the government fails to respond to its request for incentives until April.

The KSE-100 Index fell 156.75 for the fourth successive session to close at 48,523.41 on Tuesday. Pakistan Petroleum (-1.36%) , Pakistan Oilfields (-1.33%) and Oil and Gas Development Company (-0.85%) in the exploration and production sector remained in the red as oil prices struggled near low levels on rising US shale production. The daily trading volume decreased to 218.176 million.

PSC opened on Wednesday at positive note and the KSE-100 index hit 48,909 intraday high on Tuesday positive development on leverage product where the regulator approved recommendations of committee formed to review margin financing rules but after midsession the index was pushed to negative zone to close at 48,375.63 points, shedding 147.78 points. The modest gains in global crude overnight helped the uptrend with the oil sector.

On Thursday, Pakistan Equities slipped below 48,000points and closed lower for the sixth session in a row in the wake institutional selling pressure. The index shed 426.30 points to close at 47,949.44. The volume of shares traded fell to 272 million, a fall of 11%. Oil stocks came under pressure in the second half of the session.

Market remained under pressure during the first half of the trading session on Friday. However, recovery was witnessed in the last hour of the trading session as the index gained 206.60 points to close at 48,155.93. The volume too increased to 273.529 million shares.

PARTICIPANTS/ACTIVITY

On average shares of 385 companies were traded. Of these 145 were gainers and 220 were losers and 20 remained unchanged.

Foreigners were net seller by $19.11m during the week; companies were net buyers $5.16, Banks were seller $4.50m; Mutual fund net buyer $3.68m and individuals net buyer $8.88m.

Volume leaders during the week were: Bank of Punjab 141 m; Azgard Nine 116m; Aisha Steel Mills 48m; TRG Pakistan Ltd.41m; Jan Siddiqui 20m; Power Cement 17m; Sui Northern Gas 15m; Pak Refinery and Dewan Salman 12m each and Engro Polymer 9m.

TRIGGERS

– Forex reserves dropped to $21.79 billion.
– News of KP Government issuing 14 licenses for cement companies.
– News that the automobile company Pak Suzuki may roll back its $460 million expansion.

FUTURE OUTLOOK

It may be expected that volatile trading to continue in near term due to the rollover week. The positive development over the regulatory changes to the leverage product and upcoming earning season may help the market to recover the lost ground depending on the outcome the Panama case verdict.

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

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