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Value hunters diluted political uncertainty as stocks stay flat

Summary

KSE-100 Index trailing near 39,000 level has made the stocks very attractive for those investors who could not get this low value if it is predicted to go up in future. The individuals and companies, it is observed have been the buyer in the market for quite few weeks. This week the individuals were buyer by $10.71m and company buyer to the extent of $5.46m. On the contrary, the foreigners were seller $26.64m. The KSE-100 Index had a minor loss on 13.14 points at close after having a downfall of 995.66 points on Monday. The average volume improved to 131m while market capitalization decline by Rs.41 billion to close at Rs.8,317 trillion.

The last weekend development of FIA , taking into custody for interrogation of Mr. Lawai and three other bankers on money-laundering case and possible return of convicted Nawaz and Maryam Sharif had a drastic impact on Pakistan Stock Exchange on Monday. The KSE-100 Index lost 99.86 to close at 39.288.48 points. The commercial banks had the biggest drag.

On Tuesday a heavily discounted stocks were attracted for the value seeker investors who went for cherry picking and the stocks gained 164.33 points to close at 38,452.81 points. A press conference by Armed forces further builds up the confidence level of the investors. The volume too moves to 168 million from 124m on Monday.

On Wednesday the gains were extended further by 133.95 to close at 39,586.76. Index gains included fertilizer 89 points, banks 55 points, power 31 points and auto10 points.

The recovery drive continued on third day on Thursday by 288.36 points to close at 38,875.12. The investors expected an increase of 50-150 bps in Monetary Policy by SBP on July 14, 2018.

The Friday session at PSX conclude in positive tone with banks helping the Index cross 40,000 mark to close at 40,271.00. The investors expected increase in upcoming Monetary Policy to restrain domestic demand and overcome the external account challenges.

 

Participants/Activity

On average shares of 334 companies were traded. Of these 147 were gainers and 171 were losers and 16 remained unchanged.

Foreigners were net seller $26.64m during the week; companies were buyer by $5.46m, Banks were seller $0.47m; Mutual fund net seller $9.54m and individuals net buyers $10.71m.

Volume leaders during the week were: Bank of Punjab 32; Fauji Cement 25; Engro Polymer 23m; K-Electric 22m; Pak Electron & Pak Int’l Bulk (R) 11m each; D. G. Khan Cement 10m; Engro Polymer (R)10m; Maple Leaf 9 m; Fauji Foods Ltd 8m; Lotte Chemical 6m; Unity Food Ltd & TRG Pak Ltd 5m each and Faysal Bank 3m.

Triggers
  • Revenue target missed by Rs.184 billion in fiscal year 2018 despite collection of Rs.90 billion under amnesty scheme.
  • Remittances crawl up to $19.62 billion in FY18 up 1.4 percent.
  • Auto sales soar 21 percent to 258,632 in 2017-18.
  • SBP third quarterly report posted a growth of 5.8 percent for 2017-18 with twin deficit.
  • Trade default a record $37.7 billion in the on-going fiscal year.
  • Fed ordered UBL to toughen its anti-money laundering policies.
Conclusion

Technically recovery target is fixed at 40,771. The Stochastic Oscillator indicator has improved. The support and resistance are at 39,497 and resistance has crossed 40,257.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: July 14, 2018

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