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KSE-100 INDEX STAYS JERKY UNDER CORPORATE RESULTS AND POLITICAL UNCERTAINTY

SUMMARY

The first week after Panama case verdict saw the KSE-100 Index seeking direction in the market as it gained in two sessions Monday and Wednesday while Index dipped negative on Tuesday, Thursday and Friday . The result is the cumulative mix of political factors and the quarterly announcement of results by corporate sector. Interestingly in last week of January index touched highest point of 50,192 and just two days before the verdict on Panama case, Index touched lowest 46,874 points . This highlights the importance of political factor.

The KSE-100 Index, which was continuously gaining points a day before Panama verdict last week accumulating 2,834 points in four sessions continued its upward journey on Monday on the back of mutual fund and foreign investors buying of $15.40 and $4.20 million.

The KSE-100 Index gained 403.02 points to cross 50,000 mark and closed at 50,511.67. The investors interest was seen in automobile sector. The volume too increased to 399.46 million from 395.82 million. The bullish streak generated by Panama verdict was snapped on Tuesday as the KSE-100 Index went for a correction of 326.50 points on Tuesday to close at 49,785.17. Down side slide were led by Engro (2.3pc), HUBC 2.5pc, PPL 2.9pc, SEARL 4.9pc and HBL 1pc. The volume too decreased to 381.35 million.

The impact of quarterly results announced started having impact in the market on Wednesday PSMC and INDUS in the automobile sector gave promising figure for quarter result. MCB declared better than expected EPS of Rs5.52. CHCC PIOC in the cement sector announced good third quarter of FY17 results.

The Index gained 42.34 points to close at 49,827.51.

The stock market fell to near four-day lows on Thursday as investors resorted to profit-taking after a bullish rally. The savvy investors it seems want to take advantage of weakness in the market and cherry picking stocks that expected to be included in MSCI Emerging Markets. The Index lost 345.81 points to close at 49,481.70.

On Friday investors shied away from amidst growing political uncertainty and long weekend. The bearish trend continued on Friday. The Index shed 180.80 points to close at 49,300.90. CSAP in the steel sector lost value to close in its lower circuit as the company declared its result for nine months of FY17 in which it posted EPS of Rs11.29 (down 8.35pc).

The average weekly volume turnover during the week was 358.55 million shares and the market capitalization stood at Rs9.835 trillion.

PARTICIPANTS/ACTIVITY

On average shares of 397 companies were traded. Of these were gainers 173 and 207 were losers and 17 remained unchanged.

Foreigners were net seller $10.72m during the week; companies were net sellers $9.78m, Banks were seller $14.27m; Mutual fund net buyer $19.18m and individuals net buyer $10.84m.

Volume leaders during the week were: Aisha Steel and Engro Polymer 130m; Azgard Nine 105m; Summit Bank 78m; TRG Pakistan Ltd 62m; Power Cement 60m; Bank of Punjab 19m; K-Electric 15m and Dewan Cement 13m.

TRIGGERS

– Steel tycoon Jindal meeting with PM.
– Gas discovery in Sind by PPL.
– Release of textile exports numbers (+6% YoY in March-17 but down 0.9% YoY 9MFY17).
– Foreign exchange reserves declining by $417m to $21.15 billion.

FUTURE OUTLOOK

Investors interest is expected to cherry-pick ahead of MSCI review on May 15th. The progress of JIT will affect the market. Pharmaceutical sector could be in the spot light as budget proposal calls for reduction of custom duty on the import of all pharmaceutical raw material.

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

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