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FOREIGN BUYING FAILED TO BOOST INDEX AS STOCKS TOUCH ONE-YEAR LOW AND FALL BELOW 40,000
SUMMARY

The KSE-100 Index lost 1,465.74 points during the week with an average volume of 145.74. The market capitalization declined to Rs8.316 trillion compared to Rs8,642 trillion last Friday .The market remained bearish throughout all five sessions of the week. On the last trading session Friday it dipped to intraday low of 39,483 while at the end market closed at 39,848.78. The foreigners were net buyers throughout the week to gain $38.88m during the week. Mutual fund were net seller for the week of $30.16m.

On Monday, the market opened with news of arrest of former PM’s son-in-law on Sunday night. It brought about bleak investors sentiments and market shed 212.60 points to close at 41,099.99. Selling pressure was witnessed in the cement sector and profit-taking to some extent in fertilizer sector.

On Tuesday, the benchmark was on a downward trajectory from the beginning by shedding 800 points in intraday trading to hit a low of 40,287.26. Value picking at attractive levels the KSE-100 recovered and closed the day with a loss of 489.2 at 40,610.72. NEPRA decision regarding tariff petition by K-Electric initial impressions of which were negative stifled the market.

Losing streak continued in volatile stock trading on Wednesday. Despite positive opening, the Index could not sustain the upward trend as it fell 107.04 points to close at 40,503.66 points.

Index hits one-year low in intra-day trading on Thursday on news of arrest warrant issued by ECP for PTI chief Imran Khan and expected indictment of ex-PM Nawaz Sharif and his family members on Friday. The market lost 266.15 points to close at 40,237.53.

Stocks went red for the fifth straight session on Friday losing 390.75 points and hitting intraday low of 39,483 points. It later recovered to close at 39,848.78. Investors sentiment were dampened by weak economic outlook and on-going chaos on the political front by attach on NAB court by PML-N workers.

PARTICIPANTS/ACTIVITY

On average, shares of 378 companies were traded. Of these 89 were gainers and 272 were losers and 17 remained unchanged.

Foreigners were net buyer of $38.88m during the week; companies were net seller $6.50m, Banks were buyers $4.11m; Mutual Fund net seller $30.16m and individuals net seller $7.79m.

Volume leaders during the week were: K-Electric 121m; TRG Pakistan Ltd 40m; Azgard Nine 28m; Chakwaal Spinnings 12m; Engro Polymer 10m; Fauji Foods, Maple Leaf Cement and Bank of Punjab 8m each; Aisha Steel, World Telecom 7m each; Dost Steel Mills, JS Bank & Fauji Cement 6m each and Pak Elektron 4m.

TRIGGERS:
  • NEPRA announced a disappointing new multi-year tariff for K-Electric (KEL -11% WoW).
  • Possibility of improved US relationship after US President Donald Trump praised the effort of Pakistan in getting release of foreigners.
  • Government claiming restricting fiscal deficit at 0.9% of GOP in 1QF18.
  • ECC increasing OMC margin on petrol & deregulating profit margin.
  • PSO receivable hit all-time high of Rs 302.5 billion.
CONCLUSIONS

PSX stock Broker Association wrote letter on October 10 to Mr. Hang Chief Executive of Pakistan Stock explaining the causes of fall of stock market. According to them Advance Tax u/s233 at the rate of 0.02% on purchase value & 0.02% on Sale Value has no co-relation with the commission being charged by brokers as per 70 years old practice. According to them it is exploratory, confiscatory and unbearable.

Political scenario is expected to continue to affect the stock market. Upcoming quarterly earnings announcements are expected to attract the investors.

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

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