KSE-100 index crosses 44,000 level on relative political calmness
Summary
The week remained bullish as it gained 1245.11 points on four days of rising trend in the Pakistan Stock Exchange (PSX) discounting the loss of 586 points on the beginning of the week. The market capitalization too increased to Rs.9.09 trillion a gain of Rs.19 billion. The average volume declined to 184 from 276 million last week. The sentiment of the investors gained confidence as the combined opposition in Lahore failed to pull big crowd on Wednesday. It is notable to see foreigners remained buyers for the last two weeks since the appointment of a Canadian as the Head of PSX on January 11. The foreigners remained buyers by $33.11 million this week while last week they were buyers by 26.4 million.
The market started Monday on a bearish note due to local political situation on the upcoming threat of protest by two major political parties join hands with religious party cleric Muhammad Tahir-ul-Qadri in Lahore. The market shed 588 points to close at 43,112.12 despite the fact WTI crude oil trading well above $64/bbl. There was little support from E&Ps as it shed 74 points.
On Tuesday, the market opened on a positive note as the investors sensed a weakening of political forces as Muhammad Tahir-ul-Qadri announced holding only a one-day protest on Wednesday while market was expecting a long sit-in. The foreigners continued to be buyer in the market with $6.89m.The market added 592.19 points to close at 42,939.60.
On Wednesday the bullish trend continued which broke the barrier to cross 43,000 level to close at43,358.97, a gain of 419.29 points. The foreigners remained buyer with $7.47m. It seems that foreign fund managers who were reducing their position on the expectation of devaluation of the rupee, were now ploughing back the money.
On Thursday, the stock market witnessed volatile trading. It surpassed 44,004.13 level for a brief period and closed at 43,580.88 – again of 221.91 points. Results of T-Bill auction raised hopes of rate hike as banks did not bid in the 6 and 12 month T-Bill auction.
The bullish rally continued on Friday for the fourth consecutive day which broke the 44,000 barrier to close at 44,178.83. The rally added 597.95 points. Since January 1, the benchmark index has recovered 3,707 points (9.2 percent) from the loss sustained in 2017.
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Participants/Activity
On average shares of 373 companies were traded. Of these 213 were gainers and 146 were losers and 14 remained unchanged.
Foreigners were net buyer of $33.11m during the week; companies were seller by $0.31m, Banks were seller $4.36m; Mutual fund net seller $12.76m and individuals net seller $10.08m.
Volume leaders during the week were: TRG Pakistan 43m; Azgard Nine 42m; Dewan Cement 31m; PIA.C (A)22m; Lotte Chemical 22m; World Tel 20m; Faysal Bank 18m; Pace (Pak) Ltd 11m; Fauji Cement 8m; K-Electric 9m; Pak Elektron & Aisha Steel Mills 5m each.
Triggers
- PM announces that a one-time tax amnesty scheme on off shore assets will be offered to Pakistani.
- PM’s initiative to seek stakeholders suggestions on its broad-based consultative process to formulate the Strategic Trade Policy Framework 2018-23.
- SBP reserves decrease another 2.03%, now stand at $13.7 billion.
- FDI in Pakistan drops massive 71.5% in December.
- SECP softens rules for stockbrokers. PSX members will need a single license for a whole range of services.
- SBP warns current account gap can disrupt growth cycles in its first quarterly report on the state of economy.
Conclusions
The upward targets remain intact at the 200-DMA standing at 44,297. Downward could be 43,193. The RSI and the Stochastic have a positive view.
[box type=”note” align=”” class=”” width=””]Raees Uddin Khan,
Research & Development, Institute of Securities Management Research & Training (Pvt) Ltd. Karachi. Dated: January 20, 2018[/box]