KSE-100 index bounces three-day rally but gains 620 points wow
Summary
Covid-19 rising cases remained the main threat to the economy during the week and compelled government to shut educational institutions once again and upsurge poses risk to economic recovery termed the Ministry of Finance. However, Prime Minister rules out shutdown of factories, businesses on Wednesday. State Bank of Pakistan (SBP) kept interest rate unchanged at 7 percent, while foreign exchange reserves reached to almost three-and-a-half year high, improving government’s ability to meet its external liabilities. There was consistent increase and decrease in international oil prices; the political changes in the Middle East, the start of transition process of the Biden government, and the death of mother of Sharif brothers bring a bit of thaw in the political activities in the country.
During the week, the volume increased from average 171m to 280m. The market capitalization increased by Rs.111 billion to Rs.7,519 million while the KSE-100 Index jumped by 1.5% to close at 40,807.09 on Friday. The foreigners were seller by $9.27m.
The investors were concerned over continued rising Covid cases and closure of educational institutions. It reminded decline of index to 27,047 on March 26 from 43,468 on Jan 14, 2020. The KSE-100 Index on Monday declined by 554.66 to close at 39,632.52.
Mutual Fund who were seller $2,93m on Monday turned to be buyer worth $0.26m beside the oil prices in international market increased by 230.84 to 39,863.36m. The volume declined to 175m shares.
Stocks on Wednesday staged a rally of 514.18 on account of energy stock which further encouraged investors to go for banking, technology and fertilizers stocks. The Index closed at 40,377.54. The volume improved to 242m.
The rally on Thursday was extended after a dip in oil prices made investors to switch to cements shares. The Index gained 653.49 to close at 41,031.03. The volume too jumped to 389m.
The three-day rally on Friday was snapped and Index declined by 223.94 to close at 40,807.09. Buying activity in pharmaceuticals, automobile assemblers, refineries and technology sectors helped the index from sinking further. The volume improved to 398m.
Participants/Activity
On average shares of 387 companies were traded. Of these 200 were gainers and 165 were losers and 22 remained unchanged.
Foreigners were net seller $9.27m during the week; companies were buyer by $3.38m, Banks were seller $2.80m; Mutual fund net buyer $1.29m, Insurance buyer $2.92m and Individual buyer 2.70m.
Volume leaders were: Unity Foods 158m; TRG Pak Ltd 126m; Maple Leaf 65m; Hum Network & Fauji Bin (R) 52m each; Hascol Petrol 28m; K-Electric; Pak Refinery 17m each; World Call Tel 9m; and Fauji Bin 8m.
Triggers
— The SBP on Thursday reported that the total foreign exchange reserves of the country during the week ended on Nov 20 increased by $466.8m to $20.55 billion-highest since 2016-17 when peaked at $21.4 billion.
— Pakistan and the Asian Development Bank on Friday signed a $300 million policy-based loan to help promote macroeconomic stability through improved trade competitiveness and export diversification.
— SBP on Monday kept the policy rate unchanged at 7 percent signaling the risks to the outlook for both growth and inflation appear balanced for policy makers.
— Consumer confidence in Q3CY20 by Dun & Bradstreet improved by 12.1 percent indicating optimistic future expectations amidst complete lifting of lockdown and returning normalcy in trade activities.
— Stakeholders oppose SNGPL’s demand for 123 percent hike in gas rate.
— Regulator suspends hearing for 86-paisa per unit hike in power base.
— Sale of Abraaj stake in KE: SEP, other stakeholders sit together to resolve NSC issue.
Conclusion
Gallup Pakistan Executive Director Bilal Ijaz said that the consumer confidence has shown upwards trajectory for the third quarter in a row which shows that the impact of Covid-19 on economy is slowly tapering off.
The survey showed that the economic perception has improved consistently across all three quarters in 2020, high lighting upbeat consumer sentiments mainly on account of optimistic future expectations.
Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd, Karachi.
Dated: November 28, 2020