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PSX springs back as KSE-100 index breaks past 39,000 barrier
Summary

During the week the PSX market gained 824.99 points to close at 39,470.89. The volume averaged 138.174m. The market capitalization was at Rs8,320 with an increase of Rs120 billion. During the week, on the political front there were multiple encouraging political developments which benefitted the stock market. The passage of the delimitation bill has positive impact on investors as it put to rest delayed elections in the country. The Army chief address to Senators endorsed continuation of democratic process and give confidence to the investors. The fragility of the economic indicators like declining Rupee value and widening current account deficit continue haunt the investors .While positive development like lifting the ban on foreign investors to trade in the PSX stock. Regulator approving the addition of 28 securities in the Margin Trading System (MTS) and Deliverable Future under category ‘B’

On Monday the market continued its downward journey. It sank 261.92 points to close at 38,383.98. The market volume level came down to its lowest 50 million since July 9, 2014.

The fall in KSE-100 Index extended on Tuesday. The major dent came on energy sector as PM advised the power ministry to completely phase out furnace oil-based power generation plant. The Index lost 464.56 points to close at 37,919.42 since June 2016.

On Wednesday market took account of approval of delimitation bill and the Army chief’s endorsement of the democratic process. The market gained 288.64 points to close at 38,208.06.

The bullish momentum continued on Thursday. KSE-100 Index gained 507.71 points to close at 38,208.06. Investors also took fresh positions in oversold market ahead of the Christmas and new year holidays.

On Friday there was a rally of 755 points on the back of the improve investors sentiments. The market past the 39,000 barrier to close 39,470.89.

 

Participants/Activity

On average shares of 351 companies were traded. Of these 150 were gainers and 183 were losers and 18 remained unchanged.

Foreigners were net seller of $13.1m during the week; companies were net buyer 0.69m, Banks were seller $1.54m; Mutual fund net buyer $3.49m and individuals net buyer $1.72m.

Volume leaders during the week were: TRG Pakistan 64m; World Call Telecom 39m; K-Electric Ltd 31m; Dewan Salman 30m; Lotte Chemical 20m; Bank of Punjab 12m; D. G. Khan Cement 9m; Nishat Power & Dost Steel 7m each; Pervez Ahmed & Dewan Cement 4m each; Azgard Nine 3m; Crescent Star & Dolmen City 2m each.

Triggers:

– PM Shahid Khaqan Abbasi confirmation to hold election in July 2018.
– Senate passing delimitation bill.
– Approval of $825 million loan by World Bank.
– SECP approving the addition of 28 securities in the Margin Trading System (MTS) and Deliverable Future under category ‘B’.
– Reserves of SBP decreased $334m to $14.33 billion. The decrease in reserve is due to payment on account of external debt servicing and other official out flows.

Conclusions

During the week opportunities were created in Cement, Steel and Gas Utilities. The RSI and MACD have shown improvement with an upside could be 39,217. It seems that benchmark for resistance is consolidating at 39,000 level.

Raees Uddin Khan
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd,
Karachi.
Dated: December 9, 2017

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