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Stocks hobble but close bullish on positive note
Summary

Conflicting news on economic issues kept the investors confused and on sidelines on final clarity. The news of UN Trade body hinting Pakistan likely to seek fresh IMF bailout while Finance Minister claiming IMF visit is a routine matter. On criticism on ‘Mini-Budget’, the government expressed willingness to reconsider and improve some of the revenue measures, particularly to those relating to documentations. Expected contributing of Saudi-Arabia of $10 billion to the economy and turned into CPEC investing partner. All these vibes create an unclear pictures about the direction of the economy. As such market is undergoing an up and down movement.

Market volume suffered this week a decline of 21% to average 124m while market capitalization decreased by 37 billion to Rs.8,403 trillion. The Index shed 321 points to close at 40,998.59.

Starting of the week, the stock tumbled 316 points to close at 41,004.55. It started with positive news of $10 billion investment by Saudi-Arabia in CPEC projects. The hint of Finance Minister with drawing relief to non-filers to buy expensive cars and invest in property brought market in negative.

On Tuesday, the market remained range-bound with modest gain of 31.75 to close at 41,036.30. The falling reserves of $295 million kept the investors worried about exchange stability. The foreigners becoming buyers by $1.22m and the cement sector with an expected Rs.20-25 per bag rise pushed the cement sector.

On Wednesday, the foreigners turned seller by $6.36m .The apprehension of inflation on the expectation of rise in base rate by 50-100 base point in monetary policy brought index by 126 points to close at 40,909.91

The foreigners continued to be seller on Thursday by $3.02 million. The lack of clarity on different economic issues kept investors close hands. The market shed 58.22 points to close at 40,851.80

On closing day of the week Friday the market sentiment improved. There is divided opinion about monetary policy rate hike as some view no change. The market viewed Finance Minister discussion with IMF delegation as positive. The market gained 146.79 points to close at 40,998.59.

 

Participants/Activity

On average shares of 371 companies were traded. Of these 123 were gainers and 226 were losers and 22 remained unchanged.

Foreigners were net seller $9.43m during the week; companies were buyer by $3.00m, Banks were buyer $1.57m; Mutual fund net buyer$4.04m and individuals net seller$6.62m.

Volume leaders during the week were: Unity Foods & Dolmen City XD 42m each; TRG Pak Ltd 30m; Lottee Chemical 19m; Nishat Power 13m; Aisha Steel Mills 12m; Bank of Punjab & K-Electric Ltd 11m each; Ghani Autos (R) 7m; Agri Tech Ltd 5m; D. G. Khan Cement 4m.

Triggers
  • International rating agency Fitch has cut its forecast for Pakistan’s real GDP to 4.7 percent.
  • UN body says Pakistan likely to seek fresh IMF bailout.
  • The foreign exchange reserves of SBP further decreased by $293 million to $9.036 billion week ended Sept 19.
  • Monetary Policy due on Saturday.
  • Indo-Pak trade potential stands at $37 billion says World Bank.
Conclusion

The government has started tackling the economic issues and seems to be moving ahead. An early final decision on IMF bailout, forex reserves and budget proposals will give clarity to the market.

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