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Remarkable bulls control subsides on last day of trading
Summary

It was a fantastic week for the investors as the Pakistan Stock Exchange Index gained back healthy 2,585.39 points after seven weeks of depressing trend of decline. It was a gain of almost 9% in single week. The market crossed levels of 28:29:30 and 31 thousands to close at 31,350.02. Heavily oversold stocks were trading at 11-year low price-to-earnings ratio of just five time inviting value customers.

The reason could be the change of SECP team who immediately paid visit to Stock Exchange, approval of “Murahaba Share Financing”, calmness at Kashmir situation by President’s Trump intervention, news of current account deficit narrowed by 73% in July, extension of Army Chief’s service for another three years and the average volume increasing to 175m from 69m week before Eidul Azha holidays.

During the week the market closed on Friday at 31,350.02. The average volume increased to 175m and market capitalization increased by Rs424 billion to Rs6.340 trillion.

On Monday there was a rally of 798 points and stock past 28,000 level to close at 29,562.42. This was a surprise break for investors who were witnessing a 7-week of depressing market. Banking, oil and gas exploration and production and fertilizers were the gainers. In the banking sector Habib Bank and MCB hit their upper locks. The volume increased to 102 million.

The remarkable comeback on Monday continued on Tuesday as the market further gained 856.80 points to close at 30,419.22. The volume increased to 143m. The SECP team’s visit boosted the market. Among contributor to the index were HBL, MCB, UBL and Bank Alfalah all of which closed at their upper circuit.

Bull run continued on Wednesday with stock gaining 553.53 points to close at 30,972.75. OGDC, HBL UBL, Engro, Lucky Cement played a major role in pulling up the Index.

On Thursday there was great increase in volume from 135 million to 262 million shares. Also it was the highest rally of 912 points to close at 31,884. There was positive news from Canberra-Australia over Pakistan’s ability to find an exit from Grey List.

Friday being the last day of the week as well as the continued bull run there was a possibility of correction in the market. But the India headlined Pakistan blacklisted by FATF’s affiliate APG in Canberra brought the market down. Later on it was clarified by Ministry of Finance. The market lost 534.43 points to close at 31,350.02.

 

Participants/Activity

On average shares of 366 companies were traded. Of these 178 were gainers and 169 were losers and 19 remained unchanged.

Foreigners were net seller $4.97m during the week; companies were buyer by $1.55m, Banks were seller $2.57m; Mutual fund net seller $3.56m and individuals net buyers $6.47m.

Volume leaders during the week were: BOP 45m; TRG PAK Ltd 41m; Maple Leaf 41m; World Call Telecom 37m; Unity Foods 37m; K-Electric 29m; Pak Elektron 16m; Int’l Steels Ltd, Pak Petroleum Ltd and Hascol Petrol Ltd 6m each.

Triggers
  • The current account deficit shrank by a massive 73 percent in the first fiscal year.
  • Foreign investment down 22 percent. The total investment fell to $107.2 million during July.
Conclusion

Technically Index is expected to re-test resistance at the 30 DMA where a break above will lead to further gain towards the 50-DMA at 32,983 followed by 33,455. Downward it will find support at 31,265.

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