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Market took positive turn with a gain of 1.08pc wow
Summary

During May till last week the Index declined around 8 percent. This brought the market for bluechip scrips to an attractive valuations for value hunters who mop up the stocks.

The market gained 450 points during the week to close at 42,074.09. The market volume too increased to 102m while market capitalization climber to Rs8.731 trillion.

It was the rollover week for future contract and the investors mostly opted to liquidate positions , to wait and look for market direction. Investors remained focused on news of announcement of care taker prime minister, which did not materialized .The deteriorating macroeconomic number on current account deficit, the declining foreign exchange reserves and foreigners being continuous seller during the week kept investors on check for any movement upward.

On Monday the six-day losing streak turned into meager gains as stock closed flat at 41,648.65 with a gain of 25.13. The volume increased to 88m shares. Commercial banking ,cement and steel sectors remained focused for investors. Despite increase in international oil prices, Pakistan Oilfields, OGDC and Hub Power were losers.

The market went for a strong rally on Tuesday as it gained 1,096 point to close at 42,744.82. The move of government and opposition entering into discussions over the care taker set up signaled a hope of timely election for investors who see the set up bringing gains for the market. The volume surged to 141m.

After a strong gain on Tuesday the market consolidated on Wednesday with a gain of 27.43 to close at 42,772.25. The investors seemed to be concerned easing global crude oil, Moody’s expectation of a rupee fall and incoming monetary policy with policy rate change.

Stocks went for profit-taking on Thursday. PSX lost 236 point to close at 42,536.16. Investors remained concerned over non progress in care taker set up, continuous foreign selling, current account deficit widening to $14 billion and deleting foreign exchange decline worth 364m in May 11.

The political uncertainty and the last day of future roll-over kept the investors at side line. The volume declined to 110m and the Index closed 42,074.09 shedding 462 points.

 

Participants/Activity

On average shares of 333 companies were traded. Of these 154 were gainers and 161 were losers and 18 remained unchanged.

Foreigners were net seller of $26.09m during the week; companies were buyer by $2.30m, Banks were buyer $4.35m; Mutual Fund net seller $4.42m and individuals net seller $0.71m.

Volume leaders during the week were: Pak Elektron XD 38; Faysal Bank 36m; Bank of Punjab 33m; Fauji Cement XD 27m;TRG Pak Ltd 15m; Ist Dawood Bank Ltd 11m; FDIBL 11m; Unity Foods 8m; K-Eectric 7m; Engro Polymer 6m; SNGPL 6m and Fauji Foods 4m.

Triggers
  • The current account deficit has reached $14 billion in the first 10 months of the current fiscal year, higher than foreign exchange reserves and close to remittances during the same period.
  • Pakistan maintains weight in MSCI EM index.
  • FDI has grown at a slower pace during the current fiscal year compared to the same period last year. FDI has a fall in April with 143m inflows compared $179m same month last year.
Conclusions

The important events expected in coming week is the expiry of the tenure of present government and announcement of care-taker set up. The monetary policy is to be announced on 25th May. It is highly expected policy rate to be changed by at least 25 bps and account of rising inflation.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: May 26, 2018

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