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MSCI EUPHORIA TOSSES INDEX ON A RECORD BREAKING STREAK

SUMMARY

During the week the stock market remained bullish throughout the all five sessions of the week and continued taking new high with each day gathering 1,899.78 points to close the last day of the week, Friday, at 51,750.91. The KSE-100 Index closed at 49,857points during the preceding Friday thus moving this week by 3.81 percent.

The undercurrent, which moved the market and provided positive sentiment seems to lead after reclassification of MSCI date coming closure, May 15 and a bit political relaxation by settlement between Government and Army and upward trend in global oil market after issuance of statement from major OPEC and non OPEC countries regarding extension of oil supply cut upto 2018.

The budget making process got a boost when Prime Minister relaxes fiscal deficit limit for next three years to 4 percent and 6 percent growth target is fixed for the economy.

Monday carried forward the bullish momentum and continued the exuberance over the approaching entry of theKSE-100 Index in the MSCI emerging market .Stocks rallied1,084.78 to beat the previous best of 50,887 on Jan 27 to close at 50,935.91. Trading activity improved and volume touched 326.12 from previous 308.12.There was an addition of Rs190 billion to its capitalization to Rs10.044 trillion.

On Tuesday, the stock crossed 51,000 market to close at 51,073.14 an addition of 137.23 points. Few MSCI names gained and added 201 points, which include LUCK (up 2pc); HUBC (up 2.4pc), MCB (up 2.3pc) BAHL (up 3.9pc) and SNGP (up 3.5pc).

Index rally fades on Wednesday. The stock market remained under pressure with KSE-100 Index dipping 216 points. The late hour positive news regarding the Dawn leaks issue being resolved, which give boost to the market and the Index went up by 30.39 points to close at 51,103.53.

Pakistan equities resumed on a high note on Thursday driven by oil and cement sector. The surge in global oil prices after OPEC members cut supply to Asia amid dip in US inventories helped the Index. OGDC gained 2.4 percent after contributing most points to the Index followed by Lucky Cement (+1.8pc). KSE -100 Index recorded an increase of 322.48 points to end at 51,426.01 points.

Stocks continued their climb on Friday as KSE-100 Index added another 322.48 points to record breaking close of 51,750.91. The MSCI upgrade euphoria refused to bow down as investors took fresh position despite the week end ahead.

PARTICIPANTS/ACTIVITY

On average shares of 392 companies were traded. Of these were gainers 212 and 163 were losers and 17 remained unchanged.

Foreigners were net seller $2.48m during the week; companies were net sellers $8.24m, Banks were buyer $0.37m; Mutual fund net buyer $4.29m and individuals net buyer $7.32m.

Volume leaders during the week were: World Telecom 80m; Engro polymer 73m; Summit Bank 65m; TRG Pak Ltd 63m; Dewan Cement 56m; Aisha Steel Mills & TRG Pakistan Ltd 49m each; K-Electric 43m; Byco Petroleum 39m; Dewan Motors 16m and Bank Alfalah 13m.

TRIGGERS

– Credit rating agency Moody’s B3 rating is supported by its strong growth performance but serious challenges like high general debt burden.
– SBP, Iranian counterparts come up with transaction settlement mechanism.
– Macron win in France ‘good news’ for Asia: IMF
– Remittances dropped 2.8pc in 10 months.
– OICCI quarterly survey on business confidence shows a downward trajectory due to a drop in capital investments and instability in the country.
– Banks allowed settling export loans of up to $50,000.
– PM relaxes fiscal deficit limit for next three years to 4 percent.
– Service exports jump to year-on-year to $694.99 million in March.
– The overall car sales inched up to 155,966 units in the first ten months of current fiscal year compared to 152,229 in same period last year.

FUTURE OUTLOOK

The week ended has shown that as the MSCI reclassification date coming closer, investors continued to show their excitement and since the last Friday session, market remained bullish. It can be expected this bullish momentum will carry over the next week while the wider market is also expected to improve as MSCI upgrade date comes nearer.

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

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