Stocks decline, remain volatile on economic uncertainty over IMF negotiation
Summary
Finally the IMF started the talk on bailout package for Pakistan this week. There was a cloud of uncertainty among investors the way the negotiation commenced. The finance minister Asad Umar has to resign after meeting IMF team in Washington. Dr. Abdul Hafeez Shaikh had to join in place of Asad Umar as Advisor to PM on Finance and take charge of all affairs relating to bailout package. The PM Imran Khan had a meeting with Christine Lagarde, Managing Director IMF and also WB CEO on sidelines of Belt & Road Forum at Beijing China last Friday. All these happenings created an air of uncertainty in mind of investors about the bailout package to be negotiated. As such, the short week end remained bearish throughout four days of the week. KSE-100 Index slides 2.7% further WoW as investors remained wary over the news flows about negotiations in the market. The stocks reached to its lowest at 36,123 on Friday close.
Over all the participants volume declined to average of 98 million and the market capitalization touched Rs.7,372 a decline by Rs.157 billion. The Mutual Fund throughout the week off loaded stocks worth $13.44m.
Market on Monday started in positive manner as the index made a high of 307 points. It was the report of cement price hike which later on died down resulting in panic selling. The investors also concerned with incoming talk of IMF in the country. The Index lost 104,36 points to close at 37,026.27.
Concern over IMF negotiation continued on Tuesday as the KSE-100 Index shed further 242 points to close at 36,784.44. Exploration and production, cement and banking sector were the main laggard. Volume declined from 177 m to 83m on Tuesday.
Market continued to decline on Thursday after a day of break on Wednesday due to Labour Day holiday. Major laggard were banks, food and power which wiped out 129 points. The market declined by 237 to close at 36,547.63. The volume too declined 68 million.
There was political uncertainty over Nawaz Sharif case in the court along with economic uncertainty over amnesty scheme, the upcoming budget IMF conditions regarding possible hike in power and gas tariffs. The stocks declined by 425 points to close at 36,122.95 on Friday.
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Participants/Activity
On average shares of 331 companies were traded. Of these 110 were gainers and 204 were losers and 17 remained unchanged.
Foreigners were net buyer$.011m during the week; companies were buyer by $0.58m, Banks were buyer $1.74m; Mutual fund net seller $13.44m and individuals net buyers $2.4m.
Volume leaders during the week were: Unity Foods 28m; Pak Elektron 20m; Bank of Punjab 19m; Pak Int. Bulk 15m; Fauji Cement 13m; K-Electric 11m; Lotte Chemical 8m; Fauji Foods Ltd and Maple Leaf 7m each; Mughal Iron and Pioneer Cement 6m each, PIA C (A) 5m and OGDC 2m.
Triggers
- IMF team arrival, commencement of IMF bailout package.
- US$ 1 billion ADB loan likely for budgetary support.
- Laying foundation of Mohmand Dam.
- K-Electric signs deal with CMEC for 700m plant at Port Qasim.
- Brokers reject new SECP Model.
- CPI increased by 8.8% YoY in April.
Conclusion
Technically the Index has fallen below the target of 36,136. It could further extend to 35,639. Any upside will find resistance at 37,037.
Till the finalization of IMF deal, the market seems to remain volatile.