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Bulls toss KSE-100 4.7% WoW, near 36,000 mark
Summary

The positivity in the economic scenario emerged for the investors as the IMF delegate concluded its mission on Friday lauding government’s performance. Higher than expected Oct. CPI inflation up 11.04pc YoY. Prospect of cut in policy rate in the upcoming monetary policy. Downward adjustment in rates of National Saving Schemes. Pakistan maintains weight in MSCI EM Index are some forward moving indicators for the stock exchange.

On the political front government-opposition talks stall over call for PM’s exit and the Azadi March postponed its plan to march towards D-Chowk while it received lukewarm support by the two major parties. Former premier Nawaz Sharif may finally fly to London for treatment.

The stock market remained bullish on all five days during the week. The Index closed above 35,000 level for the first time in four months. The KSE-100 Index increased by 1600.55 to close at 35,978.16 on Friday. Daily trading volumes on the ready counter stood at average 258 million shares up from 166 million share previous week. The market capitalization increased by Rs.263 billion and stood at Rs.6.961 trillion on Friday. Out of the average 371,216 closed in positive 137 in negative and 18 stocks remained unchanged. The foreigners turned buyers by $4.46m this week from seller $3.12m previous week.

The bulls were in full swing on Monday as policy talks begin with IMF visiting staff mission for disbursement of second tranche of about $453 million under the $6 billion Extended Fund Facility. Besides two major parties did not join JUI-F Azadi March, KSE-100 Index gained 899.85 points to close at 35,277.46. The volume increased to 208 million.

On Tuesday, the bulls were restrained as on political front there were exchange of some harsh statements between government and opposition due to which the investors were cautious. The small cap stocks helped Index gained 80.85 to close at 35,358.31. The volume jumped to 308m shares.

On Wednesday, the release of higher than expected inflation figure of 11.04 percent for October 2019 dimmed hopes of cut in rates in the upcoming monetary policy. The stocks jumped 295.02 to close at 35,653.33.

On Thursday the foreigners turned buyer by $3.16m. The Index climbed 105.19 points to close at 35,758.52.

The bulls extended rally on Friday as the news of MSCI could be the reasons. The investors seem to expecting exclusion. The Index gained 219.64 to close at 35,978.16.

 

Participants/Activity

On average shares of 371 companies were traded. Of these 216 were gainers and 137 were losers and 18 remained unchanged.

Foreigners were net buyer $4.46m during the week; companies were buyer by $0.94m, Banks were seller $6.52m; Mutual fund net seller $0.88m and individuals net buyers $3.28m.

Volume leaders during the week were: World Call Telcom.165m; K-Electric Ltd 33m; Pak-Elektron 31m; Male Leaf XD & Fauji Cement 27m each; Unity Foods Ltd XD 24m; Hum-Network 23m; Bank of Punjab 17m; Invest Bank 14m; Lotte Chemical 13m;TRG Pak Ltd 12m; PIA 10m; Hascol Petroleum 9m; and Engro Polymer 8m.

Triggers
  • According to SBP, Pakistan’s external debt sustainability indicators are showing deterioration in debt bearing capacity due to higher external debt and liabilities to GDP ratio.
  • Minister for the Economic Affairs has said better economic policies started bearing fruit with decrease in current account and fiscal deficits and increase in foreign direct investment, revenue collection and tax base.
  • Pakistan seeks $9bn Chinese loan for ML-1, commits to border fencing.
  • No relaxation .no waivers as IMF concludes review.
  • The government has changed to expedite PSDP releases.
  • All targets met, says IMF as circular debt comes into focus.
  • MSCI retains Pakistan in its EM index.
  • Major overall planned at FBR as PM wants plan be completed by June 2020.
  • Nawaz Sharif almost off ECL, may fly to London.
  • SBP’s forex reserves also showed improvement during the week increasing 5.6% WoW to $8.36 billion.
  • 9% YoY growth in cement dispatches for Oct-2019.
Conclusion

IMF mission visited Pakistan during Oct 28 to Nov 8, 2019 under EFF to conduct first review of on-going IMF program. All performance benchmarks set up for Sept-2019 were easily met with satisfactory progress towards achievement of meeting all benchmarks. Second tranche of $450m (SDR 328) will be released on approval of the agreement by IMF management and Executive Board. This is a good sign for the economy of Pakistan. However mission emphasized complying with AML/CFT framework and stresses on completion of implementation work needed by March 2020 as required by FATF.

Technically the higher side will extend to 36,434 while RSI and Stochastic Oscilator are over bought inquiring investors to be cautious. The support and resistance are at 35,314 and 35,996 level.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: Nov 9, 2019

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