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Rising index succumbs to selling pressure at the end of the week
Summary

Pakistan Stocks Exchange started the week in a positive manner with KSE-100 Index gaining 884 points in the first three sessions of the week. In the last two sessions, the investors went for profit-taking as there were some concern about the monetary policy expectations and Fitch’s downgrade of the grading for Pakistan’s economy.

During the week the KSE-100 Index overall gained 372 points with the average volume increased to 275 million and Market Capitalization improved to Rs9.217 trillion . The foreign investors continued to be net buyers worth $12.44m.

The first day of the week Monday started as it carried forward the bullish momentum of the last week and remained upbeat with a gain of 718.86 points to close at 44,897.69, close to 45,000 level. The investors ignored the rollover week. The banking, cement and auto sectors witnessed healthy activity. The volume too surged to 294 million shares. Foreign investors were, however, net seller with $3.62m during the day.

There was volatility in the market on Tuesday and the index kept touching the intraday low of 44,465.00 mark and finally the Index ends flat after a see-saw ride with gain of 9.51 points to close at 44,907.20 mark. The volume too declined to 226 million with foreign investors again coming back with heavy buying of $11.50m. The earning results announced by National Refinery, Attock Refinery, Honda Car and Attock Cement came lower than the market expectation.

The cement sector shows positive expectations of a rise in prices after the report emerged that the court has stopped plant expansion in Punjab. The rally of 156.01 was led by cement sector. Lucky Cement was up 4.9pc, D. G. Khan Cement 4.76pc and Cherat Cement 3.75pc and to carry with the market volume increased to 339.67 million on Wednesday. The Index crossed 45,000 mark to close at 45,063.23. Foreigners continued to be net buyers worth $7.83m.

On Thursday ,the market could not maintain the upward trend as foreigners too became seller and the Index shed 246.50 points to close at 44,816.71. There was volatility in the market through the day making an intra-day high of 116 to a low of 333 points.

The last day of the week Friday continued to decline by 265.58 points as the credit rating agency Fitch’s negative outlook cautioned the investors along with upcoming monetary mixed expectations. The KSE-100 Index finally closed at 44,551.13.

 

Participants/Activity

On average shares of 351 companies were traded. Of these 202 were gainers and 154 were losers and 21 remained unchanged.

Foreigners were net buyer of $12.44m during the week; companies were seller by $14.19m, Banks were seller $13.67m; Mutual fund net seller $5.75m and individuals net buyer $24.79m.

Volume leaders during the week were: TRG Pakistan 55m; K-Electric 53m; Azgard Nine 45m; Power Cement 42m; B.O.P 37m; Sui Southern Gas 29m; Pak Elektron 27m; Dost Steel 25m; Amtex Ltd 20m; Fauji Cement 19m; Power Cement 16m; Aisha Steel Mills 15m; Dewan Cement 13m; Lotte Chemical & Fauji Foods 10m.

Triggers.

– The Senate Standing Committee on Finance has no plan to enter IMF program. The current account deficit would be met through loans and floating of bonds.

– Government approves increase in drug prices in line with inflation.

– SBP Governor informed the Senate Committee on Finance, Revenue, Economics Affairs that situation of foreign exchange reserves is satisfactory.

Conclusions

The indicators for the market are mixed, supporting a neutral view. The support is provided at 44,219 while uptrend going to 45,966 and 47,538 in sight.

 

Raees Uddin Khan, Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd, Karachi. Dated: January27, 2018

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