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Euphoria in the market as KSE-100 index rises above 40,500 mark with highest 5.5% wow gain in twelve months
Summary

It was an economic eventful week for investors. It started with the visit of Prime Minister to Saudi Arabia on Monday, which builds up expectation of investors for fund flow into the country. This anticipation continued throughout the week with news of arrival of UAE delegates on Friday for oil import facility for Pakistan and the announcement of Prime Minister likely visit on November 2 to prop up the dire finances for Pakistan. The investors were exuberant with all these developments.

Interestingly Pak Rupee strengthened from Rs.133.95 on Monday to Rs.131.50 on Friday. In Open Market, dollar declined from Rs.133.00 on Monday to Rs.131.80 on Friday. SBP reserves hit lowest since FY14 to $7.825 billion on Oct.19.

During the week the KSE-100 Index added 2,126 points to close at 40,556.45. The average volume climbed 51% to 301m. The market capitalization gained 327 billion to Rs.8,167 billion on Friday.

The week on Monday started on a low note when the KSE-100 Index shed 84.84 points to close at 38,345.42. The day snapped up the last three days bullish movement in the market.

On Tuesday, the market shed another 630 points to touch 37,000 figure to close at 37,714.90. The two days of trading in which stock exchange lost 715 points with index continuous sliding down after last week positive movement points to the fact of Asad Umar’s optimism of Saturday visit wore off as facts were contrary with foreign exchange coming to lowest ebb. Prime Minister on departure to Saudi Arabia says ‘we’re desperate‘ for Saudi loans.

Wednesday saw the KSE-100 Index shot up by 1556.22 to close at 39,271.12 points .The statement issued by Foreign Office confirming Saudi Arabia agreeing to place a deposit of US$3 billion for a period of one year as balance of payment support and a one-year deferred payment facility for import of oil up to US$3 billion to Pakistan for three years, which will be reviewed thereafter.

The euphoria created by Saudi loans soon settled down on Thursday as market moved to its basic fundamentals. There were some week earning announcements. Results of Habib Bank, D. G. Khan Cement were below market expectation. The Index gain limited to 360.79 to close at 39,631.91. The volume increased to 344m.

The Prime Minister addressed the inaugural ceremony of Deli-JW Glass Manufacturing Glass Manufacturing Complex, a Pakistan-China joint venture in private sector. He emphasized government will ensure ease of doing business will encourage investment. The government announced Prime Minister four-day visit to China on November 2 where the two sides will sign several agreements and MOUs of cooperation in diverse fields. The news had positive impact on Friday trading and raised KSE-100 Index to 924.54 points which crossed 40,000 level to close at 40,665.45.

 

Participants/Activity

On average shares of 397 companies were traded. Of these 238 were gainers and 145 were losers and 14 remained unchanged.

Foreigners were net seller $17.19m during the week; companies were buyer by $1.18m, Banks were seller $3.85m; Mutual fund net buyer $23.99m and individuals net seller $9.68m.

Volume leaders during the week were: Bank of Punjab 147m, K-Electric 104m, Lotte Chemical 84m, Pak Elektron 46m, TRG Pakistan 29m, Nimir Resins 27m, Fauji Cements 24m, World Call Telecom 15m, Azgard Nine 14m and Unity Foods Ltd and Descon Oxychem 11 m each.

Triggers
  • Rupee gains 1.5 percent against dollar as country secures Saudi funds.
  • Foreign exchange reserves fell by $264 million to $7.825 billion on Oct 19-its lowest level since 2013-14.
  • The current account deficit for 1QFY19 slightly declined by 2.5 percent or $96 million.
  • Some further rate increase are warranted, according to US Federal Reserve.
Conclusion

The concluding week has seen the mobilization of funds, the impact of which should be further felt in the coming week with more clarifications. The RSI and MACD have continued to support positive view.

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