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STOCKS TAKE A BREATHER ON INVESTOR RETURN AFTER CONTINUOUS HAMMERING ON POLITICAL TURBULENCE
SUMMARY

The stock market in present circumstances is highly dependent high level of political development happening in the country and on any economic trigger which provide positive incentive for investors to invest.

The political events like appearance of ex-PM in court on 2nd Oct.; the start of legal proceeding against Mr. Ishaq Dar –the Finance Minister, and rejection earlier his petition against it; the Bill rushed thru NA to make Nawaz Sharif party chief Such political events creates more impact with uncertainty in the minds of investor rather than by the economic events like monetary policy decision, declining foreign exchange balances ,rise in crude prices etc .

During the week the KSE-100 index lost 1097 points or 2.59% and average volume declined to 140 million shares the market capitalization declined to Rs.8.642 trillion from previous Rs.8.856 trillion.

It was the dullest day of trading on Monday as investors remained on the sidelines due to constant political turmoil. CPI inflation that stood lower than consensus 3.86% and week end monetary policy announcement where rate remained same were a non-event. The trade value dropping to just around Rs.4 billion –the lowest in 30 months since mid 2015. The KSE-100 index lost 390.37 points to close at 42,018.90.

Tuesday was the worst day of the week as KSE-100 index shed 903.12 to close at 41,115.78. Islamabad High Court rejected two petitions filed a day earlier by Finance Minister Dar challenging his indictment by accountability court and also the army chief summoned a ‘special’ corps commanders meeting to review the country’s situation.

The KSE-100 index continued declining on Wednesday as index touches a new 11-month low . There was a fall of 654.78 points and the index closed at 40,461.00 points .At one point the index plunged 1,234 points in intraday trading hitting 39,869.88 points.

On Thursday despite volatile trading with value buying in the opening and closing hours it overcame the selling pressure to close KSE-100 index gain 7.49 points to close at 40,468.49 . This brought an end to the three session of losing 1948 points.

The last day of trading Friday was a bright day for PSX as it gained 844.10 points to close 41,312.59 points . The investors seems to be happy on press briefing by the ISPR which brushed aside the martial law imposition . The departure of Mr. Nawaz Sharif to London also taken positively by the investors.

 

PARTICIPANTS /ACTIVITY

On average shares of 386 companies were traded . Of these 128 were gainers and 242 were losers and 16 remained unchanged.

Foreigners were net seller of $10.04m during the week ;companies were net buyer $6.74m, Banks were buyers $14.38 m ; Mutual fund net seller $0.32 and individuals net buyer $5.40

Volume leaders during the week were: TRG Pakistan 35m; K-Electric 31m; Chakwal Spinning 22m; Maple Leaf Cement & Bank of Punjab 19m each; World Cal Telecom 14m ; Aisha Steel Mills 11 m; Pakgen Power 10 m; Engro Polymer 8m ; Power Cement & Nishat Chunian 5m each;

TRIGGERS:
  • SBP reserves drop to two year low. It has dropped by $276m to $13.86 bn. SBP reserves reached their peak of $18.9 bn in October 2016
  • Cement sales set quarterly record of 10m tones
  • Inflation rose 0.8pc month-on-month in September compared to o.2pc in the preceding month CPI inflation clocking 3.9% YoY
CONCLUSIONS

The MACD has continued to decline supporting bearish view . Any upside could be 42,026 while the down ward can visit 39,636 and 38,987.

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

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