KSE-100 Index Recovers With 273.52 Points After Recent Meltdown
Last week there was a downfall of 2,043 points during the week and the KSE-100 Index trading at 43,000 level came down to 41,000 to close at 41,637.38 . There was improvement this week as Index gained 273.52 points to close at 41,910.90. It started on a bearish note on Monday with fall of 659 points and closed on bearish shedding 86.95 points. During the week the market remained bullish for three days when it added 1,020 points to the Index. Overall also the average volume improved to 182 million and market capitalization improved to Rs.8.665 trillion. The foreigner remained seller by $15.54.
The three irritants for the market still hampering upward movement includes: Downgrade by Moody’s of the country’s outlook to negative; unstable/fluctuating market value of rupee against dollar from 121 to Rs.125 and depleting foreign exchange reserves; and Pakistan was placed on the Financial Action Task Force (FATF) ‘grey list’ on June 27, indicating that the country failed to put in place measures to prevent money laundering and other illegal transactions that may be used for financing terrorism.
Last week’s meltdown continued on Monday when the market opened. Initially market traded positively but later on it shed 659 points on expectation of Pakistan being put on ‘grey list’ by Financial Action Task Force (FATF) the market closed at 41,246.09.
On Tuesday, the stocks recovered from four days losing streak and gained 267.86 points to close at 41,246.09. As the blue chips gone low the value hunter took the risk. Engro Corp, PPL Pakistan Tobacco, POL and PSO were major gainers.
On Wednesday, the winning streak continued as the Index gained 471.90 to close at 41,717.99. There was a positive expectation of the outcome of the Amnesty scheme. The volume rose by 30 percent to 235m.
On Thursday, the market absorbed the news of Pakistan being included in ‘grey list’ as non-event and the Index climbed 279.86 points to close at 41,997.85. Attractive valuation of Pakistani stocks and rise in oil prices and window dressing by the institutional investors pushed the Index.
The last day of the week on Friday market closed on a bearish note as investors tried to be cautious and being also the last day of the month before holidays. The KSE-100 Index shed 86.95 points to close at 41,910.90 unable to crosses the resistant of 42,000.
On average shares of 358 companies were traded. Of these 180 were gainers and 159 were losers and 19 remained unchanged.
Foreigners were net seller $15.54m during the week; companies were buyer by $3.66m, Banks were buyer $6.51m; Mutual Fund net seller $8.42m and individuals net $0.03m.
Volume leaders during the week were: Power Cement 78m; K-Electric 50m; Bank of Punjab 45m; Pak Elektron 32m; TRG Pak & Silk Bank 21m each; Pak Int, Bulk XR 16m each; Siddiqui Sons (R)15m; Lotte Chemical 9m; Aisha Steel Mills 8m and Fauji Cement 6m.
- FATF grey-listing to raise cost of doing business.
- Regulator proposes Rs.5-6 per litre hike in petrol, diesel prices.
- The government has notified increase in profit margins of Oil Marketing Companies (OMCs) and dealers by up to 10 percent on petrol and diesel sales effective.
- SBP reserves fall by $602m during the week ending on June 22.
Technically the resistance is at 42,623 and the support at 41,711.
In Amnesty scheme, nearly 5,000 people have filed returns declaring their foreign assets and deposited approximately Rs.80 billion in taxes till June 28. It is expected that amount is going to be much higher as more funds are in pipe line.
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: June 30, 2018