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Political Clarity Maintains Rising Trend At PSX
Summary

Some quick decision-making at political level cleared the apprehensions of investors and brought positivity for the second week after taking oath by the caretaker government. Six-member caretaker cabinet took on June 5, Supreme Court suspends Lahore High Court (LHC) judgment on nomination forms and find way to get details from poll candidates; and the ECP on Thursday named caretaker chief ministers of Punjab and Balochistan.

The Pakistan Stock Exchange (PSX) got elevated and the bull took market above 44,000 to finally close on Thursday at 43,948.11 after a gain of 1,036 points during the week. The average volume too climbed from 119m to 141m and market capitalization rose to Rs9.036 trillion. The foreigners were net seller $29.54m.

The market on Monday opened with positivity trend of the last week and the Index crossed the 43,000 level to close at 43,268.29 with a gain of 355.48 points. Key sectors like oil, banking, fertilizer and cement were targeted by local investor who net buyers in the market whole foreigner remained seller. Regulatory Authority issued tariff regime on market-based return formula which SNGC and SSGC which boosted the shares.

On Tuesday, the investors got comfort as the care-taker set up offered into six-member cabinet. The Index gained 434.29 points to close at 43,702.58. The volume increased from 118m to 166m . The foreigners remained seller with $8.72m. The new interim finance minister assured the investors about fresh economic guide lines.

The sentiments of the market continued towards positivity on Wednesday due to smooth transition of power and quickly forming cabinet for handling important portfolios like economics & finance, foreign affairs, interior, education and law & justice. This has given confidence to the investors and market gained 441.62 to close at 44,144.20.

During the last day of the week on Thursday, the market participants went for profit-taking and the KSE-100 Index shed 196.09 points to close at 43,948.11. The World Bank brought down Pakistan’s GDP growth from 5.8 percent in 2017-18 to 5 percent in2018-19.

Participants/Activity

On average shares of 344 companies were traded. Of these 144 were gainers and 156 were losers and 24 remained unchanged.

Foreigners were net seller $29.54m during the week; companies were buyer by $7m, Banks were buyer $4.53m; Mutual fund net $4.11m and individuals net seller $0.39m.

Volume leaders during the week were: Bank of Punjab 154; Pak Electron 56m; Sui Southern Gas 22m; TRG Pak 15m; Pak Intl Bulk, Engro Polymer XR and Lotte Chemical 11 each; Fauji Cement and D. G. Khan Cement 10m each; Adamjee Insurance and Bank AlFalah 8m each. Sui Northern Gas 6m and Pace (Pak) Ltd 5m.

Triggers

– Cement sales jumped to record 42.915 million tonnes in the first 11 months of current fiscal year.

– Foreign exchange reserves held by the SBP stood at $10.042 million during the week ended June 1, higher by $8m.

– World Bank sees Pakistan growth slowing down next year owing to higher than expected oil prices.

– Local assemblers have kept their production plans intact till September despite fears of losing 50-60 percent non-filers as their main customers of cars and light commercial vehicles from July 1.

Conclusion

Technically upside target is 44,301 moving to 44,972. The downside will find support at 43,680 & 44,436. Interesting to watch if the elections are held in time as there are doubts in some sections of the masses. The political developments during the time elections are held have to be watched.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: June 9, 2018

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