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Mutual funds and foreign buying helped KSE-100 index gain 3.3%wow
Summary

It was a short week with only three days of trading. The market remained closed due to Ashura holidays on Monday and Tuesday.

In the stock exchange on Wednesday and Friday the foreigners were buyer by $1.32m and $1.08m respectively. There was heavy buying of $7.22m on Thursday by Mutual Funds.

Over all, the KSE-100 index gained 1,014 points and crossed 31,000 mark to close on Friday at 31,481.31. This is the second consecutive gain in September by the index. Previous week it gained 795 points. The average volume too increased to 130 million from mere 93 million last week. The market capitalization has increased to Rs.124bn to close at Rs.6,312 trillion on Friday.

The three scenarios building around stock exchange working seems to have softened: The possibility of nuclear war with India; FATF challenges and Interest rate.

The Defence Ministry rules out any possibility of a nuclear war with India because of prevailing tension due to latter’s annexation of Jammu and Kashmir.

Pakistan has presented a report to the Financial Action Task Force (FATF) Asia-Pacific Group in face-to-face two-day meeting in Thailand which would now be taken up by FATF Plenary meeting scheduled for October 2019 in Paris.

Monetary Policy rate to be announced on Monday. Further acceleration is out of cards but possibility of slight decline may take place due to fiscal outages and business community pressure. The inflation expectations of IMF were 13-13.5 percent while SBP spelled out 11-12 percent in last communication.

There was a rally of 487 points on Wednesday due some positive development. Finally Pakistan has submitted in a meeting in Thailand (Bangkok) report on FATF which will be taken up by in October in Paris. Pakistan as a key facilitator in the US-Taliban talks is in touch with Americans in getting support of the Trump administration for the case in FATF. Investor’s positive expectation of rate cut in monetary policy.

The KSE-100 index closed at 30,954.83 and the volume increased to 100 m shares from 48 million last Friday. The foreigners were buyer by $1.23m.

On Thursday the bullish trend continued and KSE-100 index gained 591.78 points to close at 31,546.61. The volume jumped to 186m shares. The Mutual Fund were buyer by $7.22m.

After continuous rally for three days, the stocks lost 65.30 points to close at 31,481.31 on Friday. The foreigners remained buyers with $1.08m.

 

Participants/Activity

On average shares of 349 companies were traded. Of these 188 were gainers and 139 were losers and 22 remained unchanged.

Foreigners were net buyer $1.01m during the week; companies were seller by $1.41m, Banks were seller $4.48m; Mutual fund net buyer $5.54m and individuals net seller$4.8m.

Volume leaders during the week were: Maple Leaf 31m; Oil & Gas Development 16m; World Telecom and Hub Power Co.15m; K-Electric 12m; Fauji Cement 10m; Unity Foods 7m; Engro Fertilizer, Pak Elektron and Lotte Chemical 5m each.

Triggers
  • Foreign exchange reserves of SBP increased by $182 million to $8.462 billion during the week ending Sept 6. The total reserves of the country rose to $15.751 billion.
  • The State Bank will announce Monetary Policy rate on coming Monday. The financial sector expects a cut in the policy rate following 31 basis points drop in the cut-off yield for 12-month papers in suction of Treasury Bills held on Wednesday.
  • The Senate Committee on Commerce and Textile Industry on Wednesday asked the Commerce Division to work out a mechanism in order to reduce the burden of multiple taxation at import stage.
  • Car sales during July and August nosedived by massive 41.3 per cent to 20,094 units compared to the corresponding months last year.
Conclusion

SBP foreign exchange reserves with SBP reached a 17-week high of US$8.46 billion. Also it is seen that stock exchange index movement depends very much on Mutual Fund participants and foreigners. It is high time that SBP must connect through a product expat investors with local mutual fund industry. It shall not only be beneficial for stock exchange working, it will attract foreign exchange fund to the country.

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