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Bulls rule PSX as index crosses 39,000 level, gains 4% wow
Summary

The news of the Supreme Court of Pakistan suspending the notification confirming the extension of Chief of Army Staff General Qamar Javed Bajwa for another three years was taken by surprise by the investors. The market dashed down 417 points on Tuesday. The matter was settled to the satisfaction of government and Supreme Court at the end of the week.

The dovish language of State Bank of Pakistan (SBP) monetary statement, which while maintaining status quo at 13.25 percent, hinted at the rate reversal cycle likely to start at the beginning of CY20.

During the week stock gained 1362 points to close at 39,287.65. The average volume improved to 347m shares. The market capitalization increased by Rs.264 billion to close at Rs.7,512 trillion. The foreigners were seller by $8.06m.

Participants/Activity

On average shares of 387 companies were traded. Of these 245 were gainers and 125 were losers and 17 remained unchanged.

Foreigners were net seller $8.06m during the week; companies were seller by $0.38m, Banks were seller $13.61m; Mutual fund net buyer $10.99m and individuals net buyers $6.82m.

Volume leaders during the week were: Unity Foods Ltd 121m; Pak Elektron 99m; Fauji Foods Ltd 81m; Bank of Punjab 77m; TRG Pak Ltd 31m; Bank of Islami 28m; D. G. Khan Cement 20m; K-Electric 6m; Maple Leaf Cement 15m; Maple Leaf Cement (R) 14m; Pak Int. Bulk 12m and Pak Stock Exchange 10m.

Triggers

– Reserves held by SBP increased by $240 million to 8.68 billion during the week ended on Nov 22. Country’s overall liquid reserves to $15.48 billion.

– Debt auction have been attracting foreign inflows since July when interest rates hit a peak of 13.25 percent. Data issued by SBP shows $1.097 billion investment in T-Bills from July1 to Nov 19.

– Defending the CPEC, Finance Advisor called for global awareness campaign about the multi-billion dollar program. Government challenges US assessment of CPEC as it is based on a wrong analysis and incorrect assessment of facts said Minister of Planning Asad Umar.

– Pakistan and World Bank signed agreements worth $787m loan. Karachi to get $652m for three years.

– Pakistan Stock Exchange (PSX) to acquire trading and surveillance system from the Shenzhen Stock Exchange (SZSE). The object is to bring PSX at par with other international stock exchange.

 

Stocks opened bullish on Monday continuing the rally of last Friday. The monetary policy of SBP hinted at possibility of rate reversal. The KSE-100 Index gained 286.49 points to close at 38,212.28.

The SC suspension notification extension in tenure of Army Chief led the market shed 417 points to close at 37,795.05 on Tuesday. The surged to 489 million share from 241m on Monday. The foreigners sold $7.97m shares.

On Wednesday, the market gained 327.67 points to close at 38,122.72 points. The issue of SC notice was considered by the market as procedural issue and took it positively.

The bullish trend continued on Thursday. Investors weigh economic and political stability as new incentives for remittances and global rise in oil prices. The Index gained 583.55 points to close at 38,706.27.

On the last day of the week the bullish trend continued and index added 581.36 to close at 39,287.65 points. Foreigners came back with buying of $1.43m. The volume too increased to 429m.

Conclusion

Stabilization measures implemented over last one year have resulted in domestic demand compression in the economy. Inflation is expected to rise in November to 12.2 % YoY.

Raees Uddin Khan,
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: Nov 30, 2019

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