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BULLS TAKE HOLD AS KSE-100 INDEX POSTS RALLY FOR CONSECUTIVE FOUR SESSIONS
Summary

The positive development on the political front with selection of Shahbaz Sharif as PML-N’s interim president, country heading towards to meet the target of March 3 Senate elections, FATF fear set at rest for immediate future and possibility of improvement on the US-Pakistan relationship set up a congenial mind set for the investors, which pushed the KSE-100 Index by 1% percent. The market capitalization improved to Rs9.110 trillion. The average volume slightly decrease to 181 million shares.

Stocks on Monday continued to fall as it shed 356.18 points to close at 42,911.02. The volume too dropped to 168m. The Pak Elektron Ltd hit second lower lock on the news of debarment by World Bank to participate in tender for the next 33 months.

Tuesday saw the declining tendency in stock halt as it recovered 83.94 points to close at 42,994.96. The last hour saw much of the recovery. Bullish activity was seen in cement sector as DG Khan Cement, Maple Leaf, Kohinoor Cement, Bestway Cement and Cherat Cement all closed in the green.

On Wednesday, the stock continued with bullish trend as it gained 244.49 points to close at 43,239.45. State Minister of Finance announcement that the government would reduce tax rate from 30 to 20 percent for the corporate sector and also raise the exemption threshold from Rs0.4 million to Rs0.8m generated positive sentiment where institutional turned into buyers.

The rally was extended on Thursday fuelled by the cement stock. The Index gained 270.94 points to close at 43,510.39. The news of cement dispatches touch to 30m in first eight months of current fiscal year.

The KSE-100 Index gained 230.10 points on Friday to close at 43,740.49. The net buying of $18.8 million by companies absorbed the heavy sell of $13.19m by foreign investors. The volume on the last day of the week increased to 230m, the highest during the week.

Participants/Activity

On average shares of 366 companies were traded. Of these 186 were gainers and 161 were losers and 19 remained unchanged.

Foreigners were net seller of $9.12m during the week; companies were buyer by $11.75m, Banks were seller $3.75 m; Mutual fund net buyer $1.33m and individuals net seller $1.07m.

Volume leaders during the week were: Dost Steels Ltd 56m; TRG Pak Ltd 33m; Azgard Nine & Byco Petroleum 29m each; Pak Elektron 26m; Agri Tech 24m; Aisha Steel Mill 22m; Fauji Foods Ltd 19m; Bank AlFalah, Lotte Chemical & DG Khan Cement 11m each; Fauji Cement 10m and Engro Polymer 5m.

Triggers
  • Inflation decelerated to 3.8 percent in February from 4.4 percent in January 2018. Inflation has eased for the second consecutive month after it reached its highest of 4.6 percent in December 2017.
  • Energy sector circular debt touches record Rs922 billion by the end of November 2017.
  • Moody’s Investors Service says that its outlook for banks in Pakistan (B3 stable) is stable for the next 12-18 months but economy is susceptible to political instability.
  • Total cement dispatches in the first eight months of 2017-18 rose to 30.106m tonnes from 26.339m tonnes same period last year.
  • The total liquid foreign reserves fell by 416m to $18.413 billion during the week ended February 23, 2018.
Conclusion

Technically 200 DMA and the 30 DMA will provide resistance at 43,570 and 43,838. While downside the Index will find support at 43,176 level.

 

Raees Uddin Khan,
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd, Karachi. Dated: March 3, 2018

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