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Index tad lower as investors eye economic policies after elections
Summary

It seems investors are keenly watching the developments through reports and statements issued by expected government officials on economic policies, which are discounted for in the PSX index flow. The recent conduct of the sale of 3-month treasury bill only attracted investors while not a single bid was submitted by the investors for the sale of 6 and 12 months.

During the week, the KSE-100 Index was bullish for three days while bearish for two days. The Index shed 281 points to close at 42,505.05. The volume improved to 251m while market capitalization increased by Rs.54 billion to close at Rs.8,744 trillion. The individual investors were buyer with $26.35m while all other participants — foreigners, company, banks and individuals were seller.

On Monday, the fourth successive winning streak continued as the KSE-100 Index gained 770.18 points to close above 43,000 level at 43,556.63. The pharma sector witnessed investors’ interest as news that the pharmaceutical firms had witnessed the maximum retail price of atleast 10,000 medicines by up 4 percent. Searle Co, Ferozsons Lab, AGP Ltd and Glaxo Smith Kline all hit their upper circuits.

The stocks went for corrections after four-day rally on Tuesday. KSE-100 Index shed 844.20 to close at 42,712.43. US Secretary of State Mike Pompeo warned Pakistan against IMF bailout. Also it was revealed the incoming government is to face sluggish export, rising debt and deteriorating indicators.

On Wednesday, there was range bound trading as Index traded between high and low by 228 and 185 points. The Index finally gained 97.61 points to close at 42,810.04.

On Thursday, the Index was under pressure by the announcement of half yearly financial results by Habib Bank Ltd and UBL. The banking sector had an affect and contributed towards loss of 269 points. The KSE-100 Index shed 479 points to close at 42,330.32. The volume climbed to 285m.

On Friday, the weekend close made investors cautious on taking long position. Key sectors in the lead were fertilizer adding 120 points. The Index closed at 42,505.05 with gain of 174.73 points. The individuals continued to take fresh position while foreigner throughout the week remained seller with cumulative sale of $14.63m during the week.

Participants/Activity

On average shares of 378 companies were traded. Of these 183 were gainers and 179 were losers and 16 remained unchanged.

Foreigners were net seller $14.63m during the week; companies were seller by $1.11m, Banks were seller $5.98m; Mutual fund net seller $7.09m and individuals net buyers $26.35m.

Volume leaders during the week were: D.S. Indus Ltd 78m; Engro Polymer 68m; World Telecom 54m; Pak Electron 48m; Pak Ind Bulk 35; PIA.C (A) 33m; Unity Foods Ltd 31m; TRG Pak Ltd 21m; Siddique Sons 19m; Fauji Cement 17m; Bank of Punjab 15m; K-Electric 14m; Fauji Foods Ltd 31m.

 

Triggers
  • SBP reserves surge by $1.3 billion to $10.349 billion during the week ended on July 27.
  • Rupee appreciates 3.1 percent against dollar on Monday and lost over 11 percent in the kerb market till July 25.
  • Fresh circular debt piles up to Rs.566 billion accumulating the total liabilities up to Rs.1.066 trillion.
  • Inflation spikes to 5.8 percent in July from 5.2 percent in the preceding month.
  • Tax amnesty yields Rs.21 billion in additional revenue till July 31.
  • Pakistan rejects US opposition to IMF bailout.
Conclusion

The making of the government by the elected parties should be completed by next week bringing clarity on the political arena for the investors which is good for the Stock Exchange.

Technically the indicators are mixed, supporting a neutral view. The support for down side is 41,941.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: Aug 4, 2018

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