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Stocks shed 335 points in a week on constant fall in traded value, volume and foreign selling
Summary

During the week it was obvious that a trend is developing among investors evident by low traded value, falling volume and declining foreign participation in the stock market.

On Monday, the traded volume dip to 67 million share – the lowest in 129 sessions since June 1. The same day traded value declined to Rs.2.78 billion – the lowest in 140 sessions since May 17. The foreigners were seller this week too by $12.23m. Over all during the week under review KSE-100 Index shed 335 points to close within 38,000 level to 38,251.04 points on Friday. The average volume declined to 105m. The market capitalization increased by Rs.22 billion to Rs.7,781 billion on Friday

On Monday, the stocks fell by 276.49 points to close at 38,309.17. The session had the lowest traded value of Rs.2.78 billion in 140-session low. The SBP’s Governor statement of easing of pressure on rupee was positive statement. The volume declined to 120 session low of 67m.

The market remained dull in the absence of any trigger in the market on Tuesday .The KSE-100 Index declined by 193.36 points to close at 38,115.81.

On Wednesday the foreigners were seller to the tune of $8.42m .The KSE-100 Index came down by 52.66 to close at 38,236.52m.

The market closed positive on Thursday. The KSE-100 Index gained 173.37 points to close at 38,236.52. The gaining sectors were fertilizer, tobacco, oil and gas and cement.

On Friday, the market started in negative and hit the intra-day low of 391 points. The news of UAE committing to deposit $3 billion with SBP in few days brought positivity in the market in the second half time of stock trading. The market hit an intra-day high of 252 to close at 38,251.04 with increase of 14.52 points.

Participants/Activity

On average shares of 332 companies were traded. Of these 139 were gainers and 168 were losers and 25 remained unchanged.

Foreigners were net seller $12.23m during the week; companies were buyer by $6.28m, Banks were seller $3.01m; Mutual fund net buyer $6.56m and individuals net buyers $0.46m.

Volume leaders during the week were: K-Electric Ltd 58m; Bank of Punjab 35m; Engro Polymer 24m; Pak Electron 22m; PTCL XD 12m; Unity Foods Ltd 8m; Media Times Ltd 7m; Bank Al-Habib & Trust Investment Bank Ltd 6m each; NBP & Lotte Chemical 5m each and Fauji Foods Ltd 4m.

 

Triggers
  • The Asian Development Bank (ADB) has approved a knowledge and support technical assistance worth $220,000 for capacity building of federal, provincial governments. ADB links lending approach to IMF assessment.
  • State Bank of Pakistan (SBP) foreign exchange reserves increased by $788m during the period Dec7-14.
  • FDI during July-November FY19 clocked in at $880.7 million against $1359 m in the same period of last fiscal year; a decline of $478m or 35%.
  • Current Account Deficit for the first five months of the fiscal year fell by $722 million or 10.6 %. However, export rose by a nominal $27m while import jumped by $633m.
  • FBR readies plan to boost collection in six months.
  • Industrial policy draft to be shared soon and will announced by June 2019.
  • UAE pledges to give $3 billion in the next few days.
  • Federal Minister for Planning ,Development and Reforms has been appointed also as the Minister of Statistics enhancing the role of the Planning Commission as the research and policy think-tank of the government.
Conclusion

The bearish trend in PSX is an outcome of both international and local factors.

US stocks this week suffer one worst weekly falls in a decade as trade tensions with China, Fed. interest rate rises from 2.25% to 2.50.and a possible government shutdown. All three indices of the US — Nasdaq, Dow Jones and S&P registered a decline.

Pakistan Stocks Exchange (PSX) is in bearish mode since hike of policy rate from December 3. The investors are looking for comprehensive economic planning. The announcement of mini-budget by government adds to the anxiety of the investors. The International Monetary Fund loan now seems inevitable after Asian Development Bank linking its lending to IMF assessment. The sooner the matter is resolved the better it is for the market. Besides Prime Minister meeting last week with brokers and businessman about their problems of over taxation and over regulations should be resolved as early as possible to improve the market. The PSX Brokers Association this Friday invited Governor of Sindh at PSX, who also reiterated them of his support.

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