Roller coaster week adding up 342 points to close at 37,926
Summary
During the week two important political events were concluded. JUI-F party ended their Azadi March. The decision to allow permission to former prime minister Nawaz Sharif to travel abroad for medical treatment. On economic front the investors had expectation of some positive announcement of monetary policy on November 22 due to reduction in National Savings Scheme and higher than expected inflation for October. On the economic front the good news of current account rises into surplus by $99 million in October and the jump of foreign investment by 238 percent in four months to $650 million from 192 million same period last year gave a green signal of economy picking up.
Overall the investors sentiment accordingly moved and the market went up and down while it shed 1,463.06 in two days trading and gained 1,804.94 in three days trading to finally increase the index by 341.9 during the week.
The market on Friday closed at 37,925.79 by increase of 342 points and the average volume too increased to 331 million. The market capitalization increased y Rs.33 billion to close at Rs.7,248 trillion.
Monday started positively as the political matter of granting permission to Nawaz Sharif concluded at the week end and political matter cooled down. The stock roared 828 points to close at 38,411.56.
On Tuesday, the foreigners who bought $4.25m on Monday continued buying stock $3.96m on Tuesday. Investors were enthused by the news of Pakistan current account recorded a surplus of $99m. The index climbed 152.81 to close at 38,564.37.
On Wednesday, the investors went for profit-taking and the index came down by 526,69 to close at 38,037,68.
On Thursday, there was panic selling and the KSE-100 Index plunges 936.37 to close at 37,101.31 points. Wednesday’s T-bills auction (three months and one year) saw yields came up to match State Bank of Pakistan’s key rate, which signaled no change in policy rate on Friday.
On last day Friday there was a spectacular recovery of 824.48 points as investors believed in a positive gain for the government on the political front. The index closed at 37,925.79.
Participants/Activity
On average shares of 389 companies were traded. Of these 196 were gainers and 175 were losers and 18 remained unchanged.
Foreigners were net buyer $8.46m during the week; companies were buyer $1.99m, Banks were seller $15.15m; Mutual fund net seller $0.11m and individuals net buyers$8.87m.
Volume leaders during the week were: Bank of Punjab 94m; K-Electric Ltd 89m; Pak Electron 58m; TRG Pak Ltd 34m; Worlcall Telecom 28m; Dost Steel Mills Ltd 22m; Fauji Cement15m; Hum Network 12m; Pak Telecom 11m; Int’l Steel 10m and Unity Foods 8m.
[ads1]
Triggers
- Government raises Rs.239.7 billion through T-bills on Wednesday. The return T-bills were almost close to the key interest rate of 13.25 percent, indicating that the monetary policy which is due on November 22 may not see any change.
- Foreign exchange reserves increased to $15.462 billion during the week ended Nov 15. There was increase of $45m in SBP reserves to $8.442 billion.
- Export of textile and clothing rose by 4.1 percent to $4.58 billion in July-October compared to $4.40 billion same period last year. While for Oct’19 were $1.214 billion up by 7.44 percent to $1.13 billion same period last year.
- The government’s cash support to various sectors helped increase on-textile exports during July-Oct by 4 percent to $2,96 compared to same period last fiscal year.
- The country posted $99 million current account surplus in October after a gap of more than four years but the four-month account position still showed a deficit of $1.5 billion.
- The foreign direct investment (FDI) in the first four months of current fiscal year jumped by 238 percent to $650 million from $192m during the same period last fiscal year.
- Battered by climate change, cotton output falls by 1.814 million.
- The non-performing loans (NPLs) of the banking sector increased to 768 billion in 2018-2019.
Conclusion
Gradually the government is gaining control over the economy and reform process. Government has successfully cleared quarterly review of IMF process. The SBP monetary policy has attracted portfolio investment $650 million. Current Account turns positive with $99 surplus. Exports are picking up. Industrialization is now govt’s top priority to create employment and jobs.
From Oct 1 to date stocks have yielded stellar returns of 16.2 percent which helped the PSX grab the global spotlight as the best performing market in the world.
After a worst performing market in 2017 and 2018 globally it remained so until just two and quarter months ago. The bench market recovered all of its 2019 losses.
The present bullish trend is triggered by macroeconomic stability, failing bond yields and stable rupee have attracted investors to PSX.
Dated: November 23, 2019