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Profit-taking at the end of the week drags KSE-100 below 43,000 mark
Summary

During the week the KSE-100 Index gained almost 1% increase as it advanced from last Friday close of 42,523.99 to 42,933.72 this Friday. The average volume this week was 276.36 million while market capitalization increased by Rs.18 billion to close at Rs.8,05 trillion. Some of the market news which impacted the investors’ sentiment towards trading included: Expectation of new fertilizer policy to reduce Urea prices in the country ahead of general election; EEC approving Rs.175 billion for third LNG pipe line; threat of protests by religious leader Tahir-ul-Qadri; US-Pak relation with suggestion that Pakistan has suspended cooperation with the US and Richard Morin joins PSX on 11th Jan amid concerns among stock brokers.

Stocks witnessed another bullish move on Monday as KSE-100 Index advanced 588.13 points to cross 43,000 and closed at43,112.12. The investors welcomed the news of third LNG pipeline approval by the government. Gains were seen in gas utilities — Sui Northern Gas Company and Sui Southern Gas Company. The expected new fertilizer policy will benefit the industry. Fauji Fertilizer and Fauji Fertilizer Bin Qasim closed upper limit.

On Tuesday stocks fell 298 points after 13-day rally that enabled the benchmark index to accumulate gain of 5,193 points. The political crises in Balochistan and the announcement of Dr. Tahir-ul-Qadri countrywide protest made the investors cautious. Also view of Moody’s cautioning that further depreciation of rupee could affect government’s debt affordability affected investors’ sentiments.

On Wednesday 816-point rally tosses index above 43,000 level to close at 43,630.75. Among various reasons, attractive valuations and World Bank’s forecast for Pakistan’s GDP growth at 5.5 percent seemed to boost the market. The volume too increased to 327 million.

The KSE-100 Index opened upwards on Thursday, but soon investors resorted to profit-taking dragging index by 235.47 million to close at 43,395.28. Engro Corp contributed to the decline as the back rumors of an inquiry by NAB against the LNG terminal.

The profit-taking continued on Friday as the KSE-100 Index further deteriorated by 461.56 points to close at 42,933.72. The volume too declined by 238.67m. Perhaps the fear of next protest planned next week kept the investors on hold.

Participants /Activity

On average shares of 382 companies were traded. Of these 196 were gainers and 168 were losers and 18 remained unchanged.

Foreigners were net buyer of $26.4m during the week; companies were net seller $7.2m, Banks were seller $18.48m; Mutual fund net seller $3.32m and individuals net seller $11.42m.

Volume leaders during the week were: World Call 90m;TRG Pak Ltd 79m; Sui Southern Gas Company 69 m; Azgard Nine 53m; Pak Elektron 32m; Aisha Steel Mill 30m; Bank of Punjab 26m; K-Electric 19m; Fauji Cement 17m; Dewan Cement 16m and Lotte Chemical 8m.

 

Triggers

– Pakistan’s total liquid foreign exchange reserves amounted to a little over $20 billion on January 5 down $134.3 million.

– Exports grew nearly 15 percent year-on-year in December 2017, raising hopes about revival in the overseas sales of Pakistani goods.

– Remittances grow by $9.7 billion in the first half of 2017-18 up 2.5 percent for same period.

– The government is developing a comprehensive package for the promotion of bilateral trade with Saudi Arabia.

– Potential FDI of $800 million in Pak Auto sector.

Conclusions

The upward trend could see 44,434 as the target. The RSI has moved down while the MACD is rising signaling no clear trading view.

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

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