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BULLS TAKE A BREATHER AS STOCKS RETREAT ON PROFIT-TAKING
SUMMARY

The fundamentals which had impact on the market were due to the movement of oil prices during the week when oil sector on Monday lift the equities while at later stage on Thursday when a slump in the global crude prices brought equities down. The MSCI stock euphoria reemerged as investors flocked to cherry picking the small cap stocks that would be part of the MSCI Emerging Market Index from June 1. SECP has introduced a post close trading session to accommodate expected hike in trading activity. The post closing session would be similar to after-hours trading in developed markets except that securities would be traded at fixed price i.e. their respective closing prices after regular market hours. The foreigners during the week emerged as net buyer in the market as they boosted the market on Tuesday with their $19m buying.

Stock market started with a boom on Monday when it gained 631.48 points after stopping a break to four days losing streak of last week to close on Monday at 51,373.51. Major initiative came from oil sector as oil prices hiked in international market .POL (+4.24%) and OGDC (+3.28%) PPL (+2.55%) sector contributed to the gain. Banking sector heavy weights HBL, UBL and MCB cumulative contributed 225 points. Noteable feature was low volume of 240m compared to 345m on last Friday.

Stocks remained buoyant on Tuesday and crosses 52,000 points to close at 52,146.97, a gain of 773.46 points. Investors remained active as they awaited the reclassification of Pakistan’s bourse to MSCI Emerging Markets index on June 1.There was heavy buying in local and foreign investors.

On Wednesday, KSE-100 touched new peak of 876.46 gaining 729.49 points. The volume too hit a record high of 606.693m (last high of 695m was on Nov. 2, 2016). Oil prices rose in international market as big producer agree to keep output restricted for the rest of 2017.

On Thursday on the budget eve, the stock remained flat. The KSE-100 Index shed 7.45 points to close at 52,869.01. Stock lost bullish momentum in slump in global crude prices and pressure on banking, auto stocks and pre-budget uncertainty. Investors opted to go for profit-taking as the Index reached a new high and uncertainty on budget on Friday.

On Friday, mind set of investors for profit-taking continued and the Index lost 232.14 points to close at 52,636.87 points. Oil companies and banking sectors closed in red zone.

The average volume during the week increased to 402 million shares from 349 million last week. The market capitalization too increased to Rs10.409 trillion.

PARTICIPANTS/ACTIVITY

On average shares of 405 companies were traded. Of these 211 were gainers and 183 were losers and 11 remained unchanged.

Foreigners were net buyers $6.55m during the week; companies were net buyers $1.08m, Banks were seller $14.15m; Mutual fund net buyers 53.66m and individuals net seller $23.62m.

Volume leaders during the week were: Power Cement 249m; BOP 141m; Lotte Chemical 77m; Engro polymer 48m; Aisha Steel Mills 41m; TRG Pak.29 m; K-Electric 20m; Dewan Motors 18m; Silk Bank; Azgard Nine 16m; Power Cement 15m; Pervez Ahmed 13m; World Telecom 11m; Chakwal Spinning 11m & Dewan Farooq Sp 8m.

TRIGGERS

– ICI Pakistan has executed an asset purchase agreement with Wyeth Pakistan & Pfizer for acquiring certain assets at Rs1.91 billion.
– Textile, clothing exports record nominal decline in July-April.
– Govt-farmers talk fail after Finance Minister refused to consider their demands.
– $5 billion spent on debt servicing in July-March 2016-17.
– Govt raises Rs338 billion through T-Bills on Wednesday.

FUTURE OUTLOOK

Technically the market has stopped at support of 52,634. Any downward it could go upto 52,187 and upward the market could move to 53,107.

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

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