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Bears return as rally short-lived, KSE-100 index down 5.4pc wow
Summary

The stock exchange which gained 9% or 2,585 points last week declined this week by 1,678 points or 5.4%. It shows how mature our stock market is? Also it points to the changing sentiments of investors about the market so rapidly. It also suggested the dominance of few brokers or institutions to manipulate the Index. Definitely the presence of handful investors of around 250,000 is the cause of wide fluctuation in the market.

Last week there was positivity in the market due to three news — The Army Chief extension; The cabinet recognition that National Accountability Bureau (NAB) is harassing businessmen and current account deficit has shrunk to one-fourth of what it was same month last year.

This week the negative narrative prevailed on fear of Kashmir war concern and trade demotion and the confusion over Financial Action Task Force (FATF) development. Although there were encouraging news of talk on Kartarpur and the government positive progress with the recommendation of FATF after April 2019 and would submit a report to its Working Group in September 2019.

During the week, the KSE-100 Index closed below 30,000 to 29,672.12 on Friday. The average volume declined to 124m and the market capitalization decreased by Rs.258 billion to Rs.6,082 trillion.

On Monday the market has nosedive by 829.42 points to close at 30,520.60. Prime Minister address to the nation on Kashmir issue brought war hype for the investor beside the trade war between US and China led to weakening forecast for the global economy. The volume declined to 122m.

On Tuesday, the news of Privatization Commission to divest government’s holdings in OGDC, PPL and KAPCO brought significant pressure in stock market. However at the end there was recovery in the fertilizer and power sectors. The market gained 64.25 points to close at 30584.85.

On Wednesday, the market closed flat with gain of 52.86 points to close at 30,637.71. Market was positive throughout the day with some negativity in the middle. The volume improved to 149m.

It was quite an eventful day on Thursday due to announcement of 10 PSE to be picked for sell off and resolution of GIDC issue. The stock shed 478.75 points to close at 30,158.96.

The negativity in the market continued on Friday as it was the last day of week when the market shed 486.84 points to close at 29,672.12 points.

 

Participants/Activity

On average shares of 333 companies were traded. Of these 104 were gainers and 214 were losers and 15 remained unchanged.

Foreigners were net buyers of $3.28m during the week; companies were seller by $1.44m, Banks were buyer $5.71m; Mutual fund net seller $13.91m and individuals net buyers $6.98m.

Volume leaders during the week were: Lotte Chemical 49m; K-Electric Ltd 30m; Maple Leaf 26m; Unity Foods Ltd 19m; Oil and Gas Development 11m; TRG Pak Ltd 11m; World Telecom 10m; Pak Elektron 10 m; Bank of Punjab 7m and Habib Metropolitan 6m.

Triggers

– The government paid $11.55 billion in debt servicing during the fiscal year 2018-19 an increase of 54 percent compared to preceding year according to SBP.

– The Standard and Poor’s ranking agency on Thursday affirmed Pakistan’s ‘B-‘ long term and ‘B’ short term sovereign rating while maintain the long term outlook at ‘stable’.

– The foreign exchange reserves of SBP increased by $32 million to $8.27 billion as on August 23, 2019.

– The Cabinet Committee on Privatization has directed the Privatization Ministry to select any 10 Public Sector Entities for sell-off immediately.

– Asian Development Bank (ADB) to lend $7.5 billion over three years (20-24 ) under its next assistant strategy.

Conclusion

Technically the index may revisit low of Thursday 30,112. The support is 29,859.

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