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Stocks in search of direction as KSE-100 index closes flat
Summary

It was a week when the KSE-100 Index remained highest 43,468 and lowest 42,806 points looking for a direction to break above average 300 points range. There was no notable trigger in the market as domestic politics remained quite. The market on Friday closed with decline of Index by 39.29 to 43,167.76 on Friday.

It is expected that coming SBP Monetary policy and corporate results next week could prove to be exciting for the stock market.

The market capitalization declined by Rs.18 billion to close at Rs.8,085 trillion. The average volume too declined by 19% to average by 246m shares/day. The foreigners were buyer $3.81m and individual turned seller $2.20m.

The market remained range bound on Monday and close flat with increase of Index by 11.67 points at 43,218.67. The thaw in Iran-US relationship was the good news.

The investors went for profit-taking on Tuesday. And the Index declined by 11.63 points to close at 43,207.04. The volume declined 32 percent to average of 250m.

On Wednesday the Mutual went for selling worth $3.17m to bring Index down by 214.02 to close at 42,993.02.

Stock manages modest gain of 72.07 points to close at 43,065.09. The foreigners turned seller by $0.30m .The market has so far –fetched handsome return of 49 percent since the lows of 29,000 level in mid-August 2019.

The bullish global trend in stock exchanges witnessed after improvement in Iran-US relationship saw the KSE-100 Index gained 102.67 points to close at 43,167.76.

 

Participants/Activity

On average shares of 363 companies were traded. Of these 173 were gainers and 172 were losers and 18 remained unchanged.

Foreigners were net buyer $3.81m during the week; companies were buyer by $0.24m, Banks were buyer $2.34m; Mutual Fund net buyer $0.52m and individuals net seller 2.20m.

Volume leaders during the week were: Bank of Punjab 161m; TRG Pak Ltd 75m; Summit Bank Ltd 35m; TPL Corp Ltd 30m; Maple Leaf 27m; Silk Bank Ltd 25m; K-Electric 21m; World Call 21m; Byco Petroleum 14m; Siddique sons Tin 9m; Unity Foods 10m; Power Cement 10m and Dewan Cement 6m.

Triggers
  • US-China sign ‘momentous’ trade deal on Wednesday that will ensure “fair and reciprocal trade”. The easing of US-China trade relations has boosted stock markets worldwide in recent weeks.
  • Auto sector troubles continue as car sales plunges 43 percent during first half of 2019-20 to 59,097 units from 104,038 in the same period last year.
  • Fitch reaffirms Pakistan’s rating at B-outlook stable. High inflation and fiscal deficit, rising debt and interest payments amid slow growth are drags on credit rating.
  • Big industry output shrinks 4.61 percent for eighth-month year-on-year in November
  • 2020 is the year of 5G launch across the globe.
  • Six-month FDI jumps 68.3 percent to $1.34 billion during the first half of the current fiscal year compared to $796.8 million in the same period last year.
  • Hyundai-Nishat begin truck production on Wednesday of light trucks at its assembly plant in Faisalabad.
  • SECP on Monday introduced new brokers regime. Under the proposed setup, brokers have been divided in three categories starting with ‘Trading only’ for those with minimum net worth of Rs15 million. Category II for brokers with ‘Trading and Self Clearing’ rights with minimum net worth of Rs100 million while category III brokers have the right for ‘Trading and Clearing’ with minimum net worth of Rs500 million.
  • Textile and clothing exports increased four percent year-on-year to $6.90 billion despite several cash incentives.
Conclusion

The leading Brokerage Houses in a survey have predicted that the stock market index by end of CY2020 be around 52,000. The KSE-100 Index on 31-12-2019 closed at 40,735.07. It means during the year 2020 an increase of around 27% in stock index is expected. This is quite a positive increase during the year. The changes that have occurred during this time last year and present time is that Pakistan was still not admitted to IMF program and there was no clarity about its timing. Today Pakistan is very much a part of IMF program and successfully crossed the first IMF review. FATF matters are worrisome but definitely blacklisting is not on the cards .The tax revenue is not on target but are higher as also the inflation but still not worrisome as government is taking steps to improve the governance and law making process. As such 2020 seems to be an exciting year to work in stock exchange.

Raees Uddin Khan,
ISMAR
Dated: Jan 18, 2020

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