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PSX RECOVERS PARTLY LAST WEEK LOSSES, INDEX GAINS 971 POINTS

SUMMARY

Last week was a worst week since Feb 2009 when Index closed 7.8% WoW with the Index closing 48,555.30. The benchmark KSE-100 Index closed 25 WoW higher at 49,527 this week, partly recovering last week losses. This week the foreigners become net buyers worth $14,04m compared to net seller $149.55m last week. The market capitalization this week increased to Rs9.859 trillion from Rs9.696 trillion last week. The average volume turnover this week declined to 239.35 compared to 294.84 last week.

On Monday, the PSX makes historic gains of 1565.63 points to close at 50,120.93 points. All sectors contributed positive with commercial bank cumulatively contributing 320 points to KSE-100 Index. Saudi-led alliance cut ties with Qatar that led to an intra-day surge in crude prices. The decrease in GST to 5pc from 16pc for the construction industry in Punjab provided cement and steel sectors with a trigger. The volume increased to 255.144m up from 221.76m last Friday.

On Tuesday the equities remained range bound as volume too decreased to 231.74m. KSE-100 Index kept oscillating between intra-day high of 50,313.40 to low of 49,919.40. Investors kept on watch for foreign participation and the behavior of MSCI emerging market passive fund managers before booking profit or taking positions . The international prices slipped due to escalating Qatar-Saudi tension. This was reflected in oil stocks where OGDC and POL closed down 1.43pc and 1.62pc respectively. The Index closed 50,144.63 with increase of 23.70 points.

The KSE-100 Index witnessed another dull session on Wednesday. The market remained volatile to move between 50,350.47 and 49,968.74. The Index closed at 50,162.81 with slight increase of 18.18 points. Delay in new car manufacturing plants of a new player gave a slight boost to auto sector where HCAR up 0.31pc and PSMC up 0.26pc.

Stocks remained depressed on Thursday and shed 204.48 points to close at 49,958 .33 points. The trading remained volatile. Major contribution to the Index came from SEARL up 1.88pc; HUBC up 0.71pc and MCB up 0.71pc.

The Index remained in correction stage on Friday as it lost 431.41 points to close at 49,526.92 points. Commercial banks heavy weights cumulatively contributed 130 points towards the fall of Index. In auto sector INDU (-0.97pc) declined on the back of the news that the company has recalled 2,700 cars due to faulty mounting bolts.

PARTICIPANTS/ACTIVITY

On average shares of 370 companies were traded. Of these 182 were gainers and 170 were losers and 18 remained unchanged.

Foreigners were net buyer of $14.04m during the week; companies were net seller $0.82m, Banks were seller $6.55m; Mutual fund net buyers $11.25m and individuals net seller $19.87.

Volume leaders during the week were: Power Cement (R) 107m; Bank of Punjab (R) 95m; Engro Polymer 56m; Dost Steel Ltd 49m; Dewan Farooq Sp. 35m; Azgard Nine 28m; World Telecom 16m; K-Electric Ltd 14m; Maple Leaf Cement 10m; Bank of Punjab 9m and Aisha Steel 8m.

TRIGGERS

– Government to raise Rs41 billion from banks to bailout power sector. The circular debt liabilities rose to Rs401 billion at the end of April.
– Saudi-led alliance cut ties with Qatar.
– Foreign firms resent tax measures in Finance Bill 2017-18 including few surprises may hamper government’s effort to build trust for existing foreign investors and attract new FDI.
– Book-building for PSX stake sale. The ongoing process for the sale of 20 percent share in the Pakistan Stock Exchange marks the culmination of demutualization process this week.
– Foreign exchange reserve declining by $1.25 billion on debt payment to $20.516 billion.

CONCLUSIONS

The RSI has moved down while the stochastic Oscillator is rising signaling no clear trading view. The resistance is at 50,182.

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

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