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PSX springs back towards improvement as index gains 352 points
Summary

There was improvement in trading activity during the current week as compared to last week’s proceedings in Pakistan Stock Exchange. The KSE-100 Index moved up by 352 point to close at 43,363.21 points or 0.8%. The average volume increased to 175 million, market capitalization advanced to Rs9.065 trillion from Rs8.9 trillion. The market remained in green for three days during the week. Companies and Mutual Funds were net seller while Individuals turned out to be net seller in the market by $17.42 million as they were buyer of $2.81 million last week. Foreigners turned net seller of $7.65 million although they continued as buyer to last day of the week to two days in the current week.

The market absorbed some unexpected political news gracefully like surprising upset in the results of the selection of Senate Chairman while news of infighting between brokers relating to the formation of new board and the opening up of 10-year-old alleged share price manipulation cases by the court led to the negativity in the market.

The cement sector led the rally on Monday as manufacturer once again raised prices by Rs10 per bag. The Fauji Cement and Maple Leaf Cement grew by 3.08pc and 2.64pc respectively. Over all the cement sector added 110 points to the growth of 400 points in the KSE-100 Index to close at 43,410.93 points.

Although there was unexpected news of Senate upset, the market continued gaining 207 points on Tuesday to close at 43,618.08. The market gained as cement, fertilizer and banks price level continued to increase.

It was a bearish movement at PSX on Wednesday. The market shed 210.36 points to close at 43,407.72. It seemed as if investors opted to book profit after two days of rally at PSX. Renewed selling by foreigners of $3.34 million after two days of buying dampened the sentiment in the market.

The market on Thursday remained range bound and it closed at 43,495.07 with increase of 87.35 points. Investors are weighing the news of government presenting a technocratic and oriented growth budget, which if correct could be a booster for the PSX.

On Friday, the market court approach to open the 10-year-old cases against the brokers dampened the sentiments of the brokers and market shed 131.86 points to close at 43,363.21 points. There was already in fighting between brokers and SECP over formation of new board. The volume of the market fell by 12 pc to 193m.

Participants/Activity

On average shares of 369 companies were traded. Of these 190 were gainers and 159 were losers and 20 remained unchanged.

Foreigners were net seller of $7.69m during the week; companies were buyer by $32.07m, Banks were seller $2.18 m; Mutual fund net buyer $6.34m and individuals net seller $17.42m.

Volume leaders during the week were: Lottee Chemical 100 m; Nimir Resin 55m; Fauji Foods 24m; Unity Foods 20m; World Call Telecom 19m; Azgard Nine 18m; Pak Elektron 24m; Lalpir 10m; Engro Polymer 9m; Dost Steel 8m; Faysal Bank and Byco Petroleum 6 each.

 

Triggers
  • Sales of locally assembled cars, light commercial vehicles ,vans and jeep exhibited a 23 percent year-on-year growth to 17,354 units despite increase in their prices.
  • Government will present a ‘technocratic’ and growth-oriented budget on April 27, said Dr. Miftah Ismail adviser to PM.
  • Foreign investors call for tax cuts, consistency in policies.
  • Government to raise gas prices by 5-7 percent.
Conclusion

There are hidden triggers in the market which is attractive for investors in future working of PSX. IMF concern for structural reforms, the presentation of technical and growth oriented budget, the likeness of IMF to privatize PSM and PIA and the government willingness to do so. The court directions to government to clean up with corruption and the determination of SECP to hold PSX board polls are all such steps which are in process which could act as triggers for the market.

 

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: March 17, 2018

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