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KSE-100 INDEX GAINS OVER 550 POINTS AS MSCI EXCITEMENT LOOMS ROUND THE CORNER

SUMMARY

This week the market trading sessions were reduced by one day on account of May 1 being the Labor Day. The week was dominated by political happenings in and out of the court, which had impact on the trading activity at PSX, particularly in the first two sessions of the week when the KSE-100 Index dipped down 695 points. Supreme Court names special Panamagate bench, Court summons SBP SECP chiefs with list of official, finalization by SC JIT, Imran Khan’s disqualification case and the controversy sparked off by the Dawn leaks notification.

Positivity prevailed in the last two sessions on account of expected excitement of MSCI by the investors . The volatility of oil in the international market when reached high of $52.13/barrel and low of 46.62 did have impact on energy sector of stock market .The volume during the week declined to average of 263.79m from 358.55 m last week.

The first session on Tuesday continued for the third straight session of decline due to political tensions . The bench mark KSE-100 Index fell by 611.48 points .The pressure on the market was on the back of investor skepticism regarding political scenario and civil military row in the country. The banking sector led the decline as it closed 0.7 percent lower. In the exploration and production sector OGDC (-1.06%) and Pakistan Oilfieds (-1.06% ) as crude oil prices slid .The Index closed at 48,689.42.

Bearish trend persisted on Wednesday and Index shed 84.28 points to close at 48,605.14. The rejection by SC nominees of the SECP and SBP were interpreted by investor in negative manner and created uncertainty for investors. Faysal Bank Ltd hit the upper circuit to record 16 percent gain in three sessions following the announcement of its 1Q2017 results.

Stocks bounced back and snapped four day-losing streak on Thursday led by banking and oil and cement sector. The Index continued to pick up momentum to touch intraday high of 765 finally settling with a gain of 678.51 to close at 49,283.65. Oil Marketing Companies sector gained to close higher than the previous day as oil sales rose 16 percent month-on-month to 2.22 million tons in April.

On Friday MSCI excitement sees KSE-100 gain aggressively. The upcoming MSCI transition will change Pakistan status from frontier to emerging. This shall stimulate fresh foreign investment from around the globe. At close, PSX benchmark KSE-100 Index recorded a rise of 567.48 to end close at 49,851.13.

PARTICIPANTS/ACTIVITY

On average shares of 381 companies were traded. Of these were gainers 169 and 196 were losers and 16 remained unchanged.

Foreigners were net seller $19.28m during the week; companies were net sellers $0.88m, Banks were buyer $8.12m; Mutual Fund net seller $20.88m and individuals net buyer $27.89m.

Volume leaders during the week were: Engro Polymer 113; TRG Pakistan 53m; K-Electric 47m; Aisha Steel Mills 40m; Invest Bank 30m; Pak Int. Bulk 17m; Azgard Nine, Fauji Cement and Pak Elektron xd 12m each; Summit Bank 11m and Power Cement 9m.

TRIGGERS

– Budgetary borrowing go up 50pc.
– Cement despatches grew 6.2pc.
– Pakistan seek $2.5bn ADB loan.
– Forex reserves drop to 21bn on decrease of 146m.
– Consumer index fell to 4.8pc in April from 4.9pc in the preceding month.
– ECC approved for cut in Urea prices by Rs.200/50kg bag.
– Upcoming inclusion in MSCI ( HBL-UBL & MCB).
– Oil sales up 12 % YoY in April’17.
– Political noise on Panama JIT and Dawn leaks report.
– Gas discovery in Sindh 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 $21.15bn.

FUTURE OUTLOOK

The excitement of MSCI created may carry forward next week as it near May 15 dead line for nominations .The market closed bullish and could cross 50,000. Issues related to JIT seems to be resolved but Dawn leaks may haunt the political scenario.

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

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