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PSX REMAINS BEARISH ON POLITICAL UNCERTAINTY, RUPEE FLUCTUATION

SUMMARY

The last week before finalization of JIT investigation report put political uncertainty to a great height along with the fluctuation of Pak Rupee in the market. The market during the week shed 1,343.14 points with the average volume declining to 166 volume vis-à-vis 235 million last week. The market capitalization stood at Rs9.279 trillion.

Monday started with a blood bath on the trade floor as the KSE-100 crashed 1,899.88 points to close at 44,665.41 points . The down fall took around 327 billion in PSX market capitalization to stand at Rs9.195 trillion.

Analyst were of the view that key members of premier’s family lined up to appear this week on Panama case had the impact on the market.

Major bleeding was seen in HBL (-5pc), UBL (-5pc) OGDC (-5pc) , MCB (-5pc), Engro (-4.8pc), FFC (-4.1pc) and PSO (-4.8pc), which together contributed 881 points to the index fall. Inflation reading announcement for the month of June also failed to bring any excitement in the market.

Stocks recoup losses on Tuesday with a gain of 728.65 to close at 45,394.06 reasons for recovery was attributed like buying by institutions at attractive low valuations , hopes of good earnings and payout in upcoming quarterly results and rumors of the JIT members leaving for Qatar to record the statement of Qatri Prince taken as positive sign.

Stocks on Wednesday remained mixed and it loses momentum on currency’s plunge. The stock market after a strong rally of 964 points ended with a gain of only 19.36 points to close at 45,413.42. The main event on Wednesday was a drop of 3 percent in the rupee’s value against the dollar, which was the biggest drop in nine years according to Bloomberg.

Uncertainty over the rupee which regained its strength on Thursday , and lack of clarity on the political front caused buyers to remain on sidelines. KSE-100 share Index finished 590.31 points lower to end at 44,823.11.

The KSE-100 index recovered 399.03 points on Friday ending the week above 45,000 at 45,222.15. Stocks recovery led by auto, oil and cement scrips amid speculation ahead of financial results the next week.

PARTICIPANTS/ACTIVITY

On average shares of 349 companies were traded. Of these 144 were gainers and 190 were losers and 15 remained unchanged.

Foreigners were net seller of $5.83m during the week ;companies were net buyer $2.75m, Banks were buyer $3.86m; Mutual fund net seller $1.06m and individuals net seller $5.8m.

Volume leaders during the week were: TRG Pakistan 73m; Engro Polymer 47m; B.O.P. (R) 24m; K-Electric 20m; B.O.P. Ltd 17m; Aisha Steel Mills 15m; World Call, Maple Leaf & PAEL 9m each; Habib Metro, Ittefaq Iron Ltd 8m each; Inter Steel Ltd & Pak Int’l Bulk Ltd 6m each.

TRIGGERS

– ADB prepared to give US$6 billion loans to Pakistan over near three years.
– NIB merger into MCB Bank becoming effective Friday.
– CPI inflation stand below target at 4.16%
– Construction of Dasu project to begin within a week.

CONCLUSIONS

Technically the downward target is at 43,827, which could further lower to 42,581. Any upside will face resistance at 45,580. Stochastic oscillate & RSI have move down supporting a bearish move. The support & resistance are at 44,304 and 45,348.

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

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