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PANAMA GATE VERDICT EXTENDS KSE-100 INDEX GAINS TO 2,132 POINTS
SUMMARY

Finally long awaited Panama gate verdict unfolded on Thursday. This gave a boost to the PSX and the KSE-100 Index, which was trading at 47,577 points last Friday jumped to 49,708.65 points on Friday close, an increase of 4.48% WoW.

The KSE-100 Index during April, for the last two weeks shed 267 and 374 points till April 14. The market had been bearish since the beginning of 2017. The start of the present week was also in negative. But a day earlier before the verdict on Wednesday the positive momentum started building up and gained 719 points. The day of verdict on Thursday saw an exceptional climb of Index. It is reported that in 10 minutes, between 2:10 pm and 2.20 pm on Thursday, the KSE-100 Index jumped 1,200 points and recorded one of the fastest increase ever posted by the PSX when many made millions.

Monday was a very bad day for the investors as KSE-100 Index succumbed to intense selling pressure, which in intraday gave loss of 834 points. The uncertainty over Panama seems to be the cause of this blood bath. It was finally by the institutional investors at lower level brought about recovery and close down 452 points to 47,125.

The sentiment over uncertainty over Panama gate verdict carried on Tuesday. The stocks fall for fourth straight session to end below 47,000 at 46,874.37. The index shed 252 points during the day.

On Wednesday,KSE-100 Index undergoes most volatile session in six months. After plunging in the opening hour , stocks finally recovered 729 points to register KSE-100 Index by 1.56 %. KSE-100 witnessed most volatile session (high/low spread 3.54%) since November 2016, which could be attributed due to Panama case verdict announcement the next day April20, 2017.

On Thursday, the day of announcement of Panama gate verdict at 2 pm, KSE-100 finishes 1,140 point gain to close at 48,744. Given no immediate threat to Prime Minister the market cheered the clarity in the short term order. The market closed at 48,743.56.

On Friday ,the equities extended its gains. KSE-100 added another 965 points to close at 49,708.65. The verdict, it seemed ease the investors uncertainty and gave clear direction to work on fundamentals of the market. Also it looks that KSE-100 Index likely to resume its bull run and re-test previous high of 50,000.

PARTICIPANTS/ACTIVITY

On average shares of 382 companies were traded. Of these 206 were gainers and 161 were losers and 14 remained unchanged.

Foreigners were net seller 32.02 million during the week; companies were net buyers $2.79m, Banks were buyer$ 6.56m; Mutual fund net buyer $77.99m and individuals net seller $53.67m.

Volume leaders during the week were: Engro Polymer 107m; TRG Pakistan Ltd 98m; K-Electric Ltd 73m; Aisha Steel Mills 63m; Bank of Punjab 27m; Azgard Nine 18m; Dost Steel Mills Ltd 16m and Fauji Cement Ltd13m.

TRIGGERS

– Panama case verdict announced.
– Current account deficit rising above $6 billion on 9MFY17.
– Fauji Cement announced 3QFY17 EPS Rs.0.48. Result in line with expectation.
– OGDC result announced in line with expectation with EPS Rs.11.03.
– NBP announced 1 Q2017 result in line with expectation Rs.1.98.
– Super tax likely to be extended into new fiscal year.

FUTURE OUTLOOK

Although Panama verdict is over, but still in coming days the implementation of the verdict and further development in this respect will splinter impact on stock exchange. None the less the verdict is now behind us. The market will now focus on company fundamentals and on technical factors. The broader issues like MSCI-Emerging Market event, budget expectations and local and foreign participation will now dominate.

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

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