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Bears dominate PSX, KSE-100 index decline by 1.7pc
Summary

It was a bearish week for the Pakistan Stock Exchange as the market remained red on four sessions out of five sessions of the week. The market came down by 729.22 points to close just above 43,000 level at 43,011.27 million. Volume declined by 16 % during the week to average of 153m while market capitalization eroded to Rs.8.989 trillion compared to Rs.9.1 trillion last Friday. Political noise with three references opening on ex PM, Nab inquires, questions over Senate election, negative trend in oil prices, IMF concerns over macroeconomic situation with requirement of broad political consensus over key reforms were factors which build up a bearish trend in the market.

The first day of trading started on a dull note as volume declined to 137m and index crawling 88.59 points to close at 43,829.08 from a rise of 230 points on last Friday. The bullish trend after Senate election did not materialized as there were concerns over the election. Key high lights include Searle Pakistan announcement of joint venture with Belgium food supplement manufacturer.

On Tuesday, the five days bullish tendency succumbs to selling pressure on news of NAB approving three supplementary references against Mr. Nawaz Sharif and Mutual Fund emerged sellers with $6.40m.The index shed 123.98 to close at 43,705.10

The report of IMF showing concern on macroeconomic issues of Pakistan and the falling foreign exchange reserves further brought KSE-100 index down by 263.92 43,441.18 on Wednesday.

On Thursday, the individuals opted for profit-taking after two-day of buying to selling $0.59m.The news of NAB opening cases against 52 companies dented the sentiments of the investors. KSE-100 index sank by 368.44 m to close at 43,072.74.

The bearish trend continued on last day of the week Friday although it started on a positive note. News of US imposing tariffs on import of steel dampened the sentiments in the stocks. However the index was supported by the news of discover in Adhi South X-1.

Participants /Activity

On average shares of 358 companies were traded. Of these 117 were gainers and 218 were losers and 23 remained unchanged.

Foreigners were net seller of $4.27m during the week; companies were seller by $4.69m, Banks were seller $0.4 m; Mutual fund net 6.61m and individuals net buyer $2.81m.

Volume leaders during the week were: Azgard Nine 54m; Unity Foods 44m;Fauji Cement & Pak-Elektro 27m each; Matco Foods Ltd 13m; Dost Steels Mills Ltd 10m; World Call Tel, Byco Petroleum, K-Electric & PIA © A 9 m each; Agri Tech Ltd 8m; Engro Polymer, Nemir Resins and Lottee Chemical 7m each; Bank of Punjab 6m and Sui Southern Gas 5m.

Triggers
  • Reserves fall by 0.45 percent to $18,329.2 million ending March 2.
  • PIA to be revamped before privatization.
  • IMF calls for greater political consensus on key reforms.
  • Pakistan lagging behind rivals in textile competitiveness. Pakistan earning $1 billion while Bangladesh $6 billion.
  • Remittances rise to $12.8 billion in first eight months of the fiscal year.
  • PC tasked to ready new five-year plan in three months.
Conclusions

The index has dropped below 50-DM & 200 DMA. The RSI and the MACD have moved downward supporting a bearish view.

The expected decision on tax amnesty scheme, appointment of Senate Chairman and new budgetary measures by the government may be expected as new triggers for the investors.

Raees Uddin Khan,
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: March 10, 2018

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