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Volume crosses 106pc wow as stocks added 963 points
Summary

The government after managing the public expectation on Kashmir issue, finally came back in October to pursue its economic reform agenda which in fact is more important for the country. As such the first week of October saw brisk and positive activities on economic scene: NA passes bill to amend Foreign Exchange Regulation Act 1947; E-commerce policy approved by the Cabinet; Projects worth Rs.681 billion approved by National Economic Council; NAB won’t pursue tax evasion cases assured by Chairman NAB; National security intrinsically linked to economy, said Army Chief to business community.

All the above translated into rise of KSE-100 Index by 3% Wow to cross 33,000 level. The volume increased by 106% WoW to 223 million shares. This is almost 12-month high volume. The market capitalization increased by Rs.145 billion to close at Rs.6,554 trillion.

Stocks on Monday close flat with rise of 8.04 point at 32,078.85, the volume rose to 166 million from 135 million of last Friday. K-Electric volume top the list with 56 million shares on the news of signing $50m loan pact.

On Tuesday the cement stocks kept the market upward with the volume of Maple Leaf and Fauji Cement were 12 and 15 million respectively as Cement exports 1QFY20 jumped to 11.5 percent. The Index gained 175.47 points to close at 32,254.32.

The cement stock kept the stock on rise on Wednesday as Index gained 109.02 to close at 32,363.35. The volume remained 181 million.

On Thursday the volume hit 11-month high of 324 million shares to gain 388.91 points to close at 32,752.26. The optimism was drawn as IMF first quarter seems to be achieved and the SBP Governor assumption that present IMF program to be the last.

The equities gained 281.06 points on Friday to close at 33,033.32. The Jamiat-Ulema –e-Islam (F) announced Azadi March towards Islamabad on October 27.

 

Participants/Activity

On average shares of 374 companies were traded. Of these 241 were gainers and 117 were losers and 16 remained unchanged.

Foreigners were net seller $4.7m during the week; companies were buyer by $2.94m, Banks were seller $4.13m; Mutual fund net seller $0.26m and individuals net buyers $4.39m.

Volume leaders during the week were: K-Electric Ltd 125m; Unity Foods Ltd 72m; Maple Leaf 58m; World Call Telecom 47m; Dost Steel Mills Ltd 27m; Fauji Cement XD 25m; TRG Pak Ltd and Bank of Punjab 21m each.

Triggers
  • The FBR missed revenue collection target for the first quarter of current fiscal year by a wide margin of Rs.111 billion against the target of Rs.1,071 billion.
  • Based on new base year (2015-16), September inflation came in at 11.37 percent versus 10.49 percent in the previous month.
  • The country’s total cement despatched during 1QFY20 went up by 2.56 per cent to 11.133 million tonnes.
  • FBR may continue to go slow policy for gradual implementation of CNIC condition of the unregistered buyers till January1, 2020.
  • K-Electric signs $50m loan agreement with Standard Chartered Bank supported by Guarant Co to undertake upgradation of power infrastructure.
  • A three member parliament committee of major political parties called for cut in central bank policy rate and non-development expenditure coupled with removal of indirect taxes on consumer items and exchange rate stability to address inflation and stimulate investments and economic growth.
  • Prime Minister welcome Egyptian businessmen $1 billion investment plan.
  • SBP foreign exchange reserves declines by US$724 million coming down to US$7.7 billion, which is delay in rollover of US$700 million commercial loan of Chinese Bank.
Conclusion

The stock exchange remained bullish on all five trading days as both the Prime Minister and Army Chief put emphasis on the economic scenario of the country. With focus on the right direction and good intention, there is ample of room for economy to grow and KSE-100 Index to blossom in coming days. The three-member NA committee is an extra check on the policies of the government. The successful meeting during most of the IMF first quarter targets is a welcome sign for the economy.

Raees Uddin Khan,

Research & Development Institute of Securities Management, Research & Training (Pvt) Ltd, Karachi

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