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KSE-100 INDEX REMAINS RANGE-BOUND; INVESTORS WAITING FOR PANAMAGATE VERDICT
SUMMARY

The market almost got into hibernation mode since March 31 as it remained range-bound from 47,949 on March 31 till today closing at 47,577. It seems that investors are waiting for long awaited Panamagate verdict so that political uncertainty is cleared.

There were some positive triggers; crude oil bounced back above $50; Government lifted the ban imposed on new gas connections to industries; CDC and NCCPL sent out notices where they have invited brokers and bankers to discuss the potential changes to the in house financing model and lastly there is unofficial news about amnesty scheme being in pipeline.

The week ended April 14 saw Index shed 312.31 points to close at 47,577.06. The volume improved this week to average 170.873 million shares compared to 155 last week. The market capital stood at Rs9.422 trillion.

Stocks added 54 points on Monday although trading remained dull and range bounded. Investors showed lack of interest and trading activity remained low as volume declined to 130.699 million. Despite foreign selling $0.49m the Index climbed to 47,942.95. Exploration and production sector gained as crude oil prices continued their upward trajectory to trade above $52.50 a barrel.

On Tuesday KSE-100 Index extended its gain and settle above 48,000 gaining 307.12 points to close at 48,250.07. Support to crude oil price came from news that Russia intends to start consultations with its oil production with the possibility of extending its output cut deal with OPEC. Major Index gainers of E & P sector were POL 3.03 percent and PPL 0.62 percent. Banking sector also rallied as it gained (0.82%) higher than its previous day’s close. HBL (+2.24%) and UBL (+0.45% ) were major index movers. At close PSX benchmark Index recorded a rise of 307.12 at 48,250.07.

Oil scrips lead Index to a buoyant close at 48,457.26 a gain of 207.19 points on Wednesday. The increase in international oil prices to around $53.60 provided confidence to the investors to invest in E&P sector. OGDC went up 0.83 percent, POL 1.36 percent and PPL1.76 percent. SNGP and SSGC rose 2.99 percent and 2.28 percent respectively on the back of the news that the government has lifted eight-year moratorium on new gas connection to all categories.

After four successive days of ending in positive on Thursday the KSE-100 Index dipped on the rumors regarding the Panama case verdict that could be announced next week. Selling pressure may have been amplified due to Sindh Chief Minister’s comment s regarding nationwide gas shutdown, the resurgence of Indo-Pak tensions and the looming fear related to impending verdict on the Panamagate case. The KSE-100 Index plunged 507 points to finish at 47,951 points.

 

The momentum of loss in index continued on Friday as KSE-100index shed 373.52 points to close at 47,577.06. Volume too declined to 125.77m and skeptical investors preferred to remain on sidelines on the last working day owing to political uncertainty and expected result of Panama case next week. Apart from banking sector major contribution to the decline came from OGDC, HUBC and FFC.

PARTICIPANTS/ACTIVITY

On average shares of 377 companies were traded. Of these 160 were gainers and 199 were losers and 18 remained unchanged.

Foreigners were net seller by $2.17m during the week; companies were net buyers $2.32m, Banks were seller $0.01m; Mutual fund net buyer $4.55m and individuals net seller $4.38m.

Volume leaders during the week were: TRG Pak Ltd 59m; Azgard Nine 54m; Aisha Steel Mills 52m; Sui Southern Gas 26m; Dewan Cement 25m; Engro Polymer 22m; Lotte Chemical 17m; Pace Pak Ltd 8m; Pak Gen Ins. and Pak Elektron 7m each; K-Electric and BOP 6m each.

TRIGGERS

– Moody’s comments that CPEC & the IMF program has strengthened Pakistan economy.
– Release of trade deficit number +39% YoY to $23.38 billion.
– PSO receivable reached Rs.281 billion.

FUTURE OUTLOOK

The investors are cautious due to pending Panama case verdict. The RSI and the Stochastic Oscillator have taken a down turn supporting a bearish view.

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

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