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Index hits 4-year low on Pakistan-India tension over held kashmir and number of political arrests
Summary

If it is considered that ‘Stock Exchange’ is the ‘barometer’ of economy than last week long week (Eidul Azha and Independence Day holidays) it has shown that Pakistan’s economy is standing at its lowest ebb with KSE-100 Index standing on Friday at 29,429.07 — the lowest level in more than four years.

The incident of India occupied Kashmir where Indian parliament revoked the special status of it and number of political arrests has shaken the stock exchange, which remained red in all five days of the week. The investors feel uncertain as even the foreigner were seller in market worth $1.54m.

On April 12, KSE-100 Index was 37,338 and exchange rate presently is Rs.158.25/30. Indian BSE index presently is 36,699.84 and exchange rate IR70.47/48. Pakistan government has to fight the real battle at this economic level to beat the opponent.

During the week, the KSE-100 Index shed 2,237 points to close at 29.429.07. The average volume increased to 69m shares while market capitalization decreased by Rs.325 billion to stand at Rs.6.020 trillion.

The week opened on Monday with the news of BJP’s constitutional amendment and incident of cross border firing, which brought the Index down by 485.61 points to close at 31,180.80.

The tension over occupied Kashmir continued on Tuesday as the country’s civilian and military leadership continued to deliberate on Kashmir situation. The Index shed 180.13 points to close at 31,000.67.

On declining political situation on Wednesday over arrest of former finance minister Miftah Ismail and Imranul Haq former PSO MD brought index down by 723.3 points to close at 30,277.45.

Stocks went further down below 30.000 on Thursday with the arrest of PML-N Vice President Maryam Nawaz. The Index shed 539.47 points to close at 29,737.98.

Stocks continued on their losing streak on Friday on political uncertainty, geopolitical tension and MSCI review and lost 539 .47 points to close at 29,429.07.

 

Participants/Activity

On average shares of 324 companies were traded. Of these 97 were gainers and 208 were losers and 19 remained unchanged.

Foreigners were net seller $1.54m during the week; companies were buyer by $6.92m, Banks were buyer $4.39m; Mutual fund net seller $6.65m and individuals net seller $5.94m.

Volume leaders during the week were: Maple Leaf 27m; K-Electric Ltd 20 m; TRG Pak Ltd 16m; Unity Foods 4m; Inter Steel, Lotte Chemical & Engro Polymer 5m each; United Bank 5m; B.O.P and Cherat Cement 3m each; Hub Power & Fauji Fertilizer 2m each.

Triggers
  • NAB arrests Maryum of Nawaz League at Kotlakhpat jail, Mifta Ismail former finance minister and Imranul Haq former MD PSO.
  • Remittances rise 2.8 percent in July. It clocked $2.04 billion compared to $1.98 billion in the same period last year.
  • Domestic gold prices on Friday touched all-time high of Rs86,250.
  • Corporate results: UBL PAT for 2QCY19 soared by 51% year-on-year to Rs5.13 billion, MCB Rs5.44 billion; Cherat Cement down 17 percent Rs1.76 billion.
  • SECP Chairman Farrukh Subzwari replaced by Amir Khan for a period of three years. Syed Masoud Ali Naqvi appointed Chairman Policy Board replace Mr. Khalid Mirza.
  • Record 2.5m tax returned filed for tax year 2018 as against 1.49m filed tax year 2017. Resident Representative Teresa Daban Sanchaz explains revenue mobilization, market based exchange rate and social sector protection through increase in social spending as three pillars of IMF program.
  • Efforts afoot to implement FATF action plan, says Abdul Hafeez Shaikh, Adviser to PM on Finance.
Conclusion

Technically the Index could go to a low of 289,562 to 28,168. Upside it could touch 29,805-30,185 where a break above will kick off the upward correction. The Index is trading below bollinger band and is in oversold position. Short term recovery cannot be ruled out.

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