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STOCKS TURNED INTO BULLISH TONE, INDEX SETTLE ABOVE 46,000-MARK
Summary

The PSX stocks have been continuously gaining momentum since three weeks starting from March 12 till date. KSE-100 Index has been advancing 0.8%, 3.8% and 1.2 % for the last three weeks. The Index has crossed from 43,000 level to 46,000 level as on April 6, 2018. The clarity and calmness on political front along with some economic steps taken seem to give confidence to the investors and strengthening the stock market.

Overall there was improvement in all the indicators of PSX. The KSE -100 Index gained 1,077 points. This week it crossed to 46,000 mark. The average volume improved to 259 million shares. The market capitalization advanced to Rs9.531 trillion from Rs3.370 trillion. The foreigner remained buyers by $3.61m compared to $1.90m last week.

When market opened on Monday it continued extending its rally, by 181.13 points to close at 45,741.43. As State Bank of Pakistan (SBP) in its new Monetary Policy kept the rate unchanged, banking shares which were in demand last week fell. In steel sector, International Steel hit ‘upper circuit’ and Aisha Steel rose 4pc as both companies increased CRC prices by 2-2.5pc.

On Tuesday, PSX stocks started on a weak note due to jitters in the Asian markets but later on due to mutual fund involvement and cement, stocks of oil, steel, fertilizer and automobile picked up to gain 271,91 to cross 46,000 mark and helped Index closed at 46,013.34.

Banking stocks were again in limelight on reports of decline in non performing loans to 8.4pc in 4Q2017 from 10.1pc same time last years. The news of demands to withdraw super tax from banking companies in budget 2018-19 also supported banks. There was profit-taking at the end which trimmed the gains.

On Thursday, the bull continued marching upward as Index gained 457.21 points to close the index at 46,560.82 .The investors sentiments received a boost on the news of PM announcement in evening of amnesty scheme. The investors view the scheme to boost up the foreign exchange reserves along with anticipated inflows into the capital market.

On Friday, the KSE-100 Index continued upward movement due to the amnesty scheme but later on the climb was brought down by the negative reaction of the opposition parties on the scheme. The KSE-100 Index gained 76.80 points to close at 46,637.

Participants/Activity

On average shares of 378 companies were traded. Of these 193 were gainers and 163 were losers and 22 remained unchanged.

Foreigners were net buyers of $3.61m during the week; companies were seller by $8.68m, banks were seller $15.91m; mutual fund net buyer $45.39m and individuals net seller $4.39m.

Volume leaders during the week were: Engro Polymer XD 85m; Lotte Chemical 67m; Fauji Cement 48m; K-Electric Ltd 41m; TRG Pak Ltd 28m; Pak Elektron 18m; Byco Polymer XD 17m; World Call 16m; Sui Northern Gas and Aisha Steel Mills 13m each; Bank of Punjab 10m; Nimir Resins 9m and Azgard Nine 8m.

Triggers
  • There is proposal to cut tax for salary class.
  • PBA proposing 2% collection charges given to bank for performing WHT agent services and possibility of withdrawal of Super Tax.
  • Final approval of sale of K-Electric now subject to ratification by the cabinet.
  • Government estimating fiscal deficit at 4.6 % for FY19.
Conclusions

Technically the uptrend next target is 46,862. A fall below 46,013 will kick off the corrective trend. The RSI and Stochastic Oscillator are over bought.

 

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: April 7, 2018

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