POSITIVE TRIGGERS FAILED AS POLITICAL SHENANIGANS HEIGHTENED INVESTORS ANXIETY
Stock market seems to function smoothly on account of basic fundamentals. Triggers, the market stimulus, which moved the market were present in last week’s trading. Supreme Court‘s judgment in favor of the pensioners of National Bank of Pakistan (NBP), which will likely cost the bank approximately Rs47.7 billion hit the lower lock of the bank on Monday. Global urea prices posted biggest weekly gain in almost four years Crude oil surge were visible as oil prices hovered near 26 months high supported by Turkey’s threat to cut crude exports from Iraq’s Kurdistan leading to E&P sector closing in green zone on Tuesday.
The political events of ex-PM appearance on Tuesday in the court and the indictment of FM on Wednesday created doubts in the minds of investors. Furthermore the press conference of ex-PM, and appearance again of ex-PM on 2nd October and start of court hearing on 4th Oct of FM create doubts for investors about the economic process and its affect on the market. The market did show positivity on two days, Thursday and Friday, when it gained 73 and 46 points. However it failed to close above 43,000 level. During the week the market shed 341 points to close on Friday at 42,409.27.
On Monday, there was a brief positive opening which crossed index beyond 43,000 on the back of interest in fertilizer scrips due to global surge in urea prices. Fauji Fertilizers and Engro Fertilizers were the main beneficiary. The gains were wiped out with the news of NBP pensioners winning the case in Supreme Court. NBP hit the lower lock (NBP-5%). The market closed at 42,743.65 losing 6.55 points.
On Tuesday the market gained momentum as oil lead gains tracking higher global crude prices. The event of Nawaz Sharif appearing in the court caused investors to be careful and brought market 77.42 points to close at 42,666.23.
Finance Minister Ishaq Dar indictment on Wednesday on owning assets beyond his declared source of income brought profit-taking on PSX. The market shed 376.08 points to close at 42,290.15 points. The euphoria over the upsurge in international crude oil prices did not last long.
On Thursday, KSE-100 index broke its losing streak of five days and gained 72.72 points to close at 42,362.87. Oil was the only main stream sector to close in the green with Pakistan Oilfields (+3.6) being the star performer.
There was a mixed trend on Friday. Stocks closed higher on the quarter-end close led by auto, cement and pharma scrips on strong earnings outlook. The KSE-100 Index gained 46.40 points to close at 42,409.27.
During the week, the index shed 340.93 points with average volume 146.36 and market capitalization of Rs8.856 trillion.
On average shares of 372 companies were traded. Of these 161 were gainers and 191 were losers and 20 remained unchanged.
Foreigners were net buyer of $0.52m during the week; companies were net buyer $2.20m, Banks were seller $10.32m; Mutual fund net buyers $6.23 and individuals net seller $2.05m.
Volume leaders during the week were: K-Electric Ltd 93m; Bank of Punjab 37m; World Com Telecom 25m; TRG Pakistan Ltd 22m; Kohinoor Spinning 18m; Silk Bank 12m; Pak Int’s Bulk T 10m; Aisha Steel, Dolmen City XD 8m each; Fauji Fertilizer and Maple Leaf 6m each; Dost Steel, Lotte Chemical and Chakwa Spinning Mills 5m each.
- ADB approves $800m to help enhance regional connectivity and trade in the Central Asia Regional Economic Cooperation corridors in Pakistan.
- Apex court’s ruling in favor of pensioners to cost NBP Rs48 billion.
- Dollar buying gathers momentum. Bankers link growing demand for the fears of an approaching devaluation.
- Reserves slide by 48m. Reserves of the SBP decreased $151m to $14.13bn due to external debt servicing and other official payments.
- Monetary policy on Sept.29
Political events in the coming weeks have to be watched. On Tuesday Oct.2 former prime minister Nawaz Sharief to appear in the court. The hearing of case of Finance Minister to start on 4th October.