Positive macros and political clamour keep market range bound
Summary
The week remained range bound on account outcome of two political events scheduled by Opposition on 8th December and 13th December. It was decided by PDM (Pakistan Democratic Movement) on 8th December that alliance of 11 political parties would submit their resignation to their respective leadership by December 31, 2020 in a bid to step up pressure on PTI government. As such bullish trend turned negative for the first two days on trading on Monday and Tuesday. But the positive macros: i) rupee turning strong; ii) foreign exchange reserves rose by $188 million to $1.29 billion and iii) Pakistanis have remitted $7.7 million highest-ever daily amount into Roshan Digital Pakistan Account on Nov 9.
The KSE-100 Index closed 42,470.40 on Friday with the addition of 322.17 to the previous year’s Index. The average volume increased to 452 million with the addition of 46 billion to the market capitalization to close at Rs.7,775 trillion.
Stocks snapped the five day rally on Monday as the Index shed 91.69 to close at 42,115.31. The opposition PDM reserved important decision against the government for 8th and 13th December, 2020.
On Tuesday, investors remained on sideline as the opposition has to take decision on later in the day. The Index shed 13.53 points to close at 42,101.78.
Stocks gain 102 points on selective buying on Wednesday where KSE-100 Index recoded gains of 102.2 points and closed at 42,204.03.
It was range bound trading from Thursday to Friday on positive micros of strong foreign exchange reserves, higher remittances on Roshan Digital Account. The Index close 42,305.84 with gain of 101.81 points and 42,470.40 with gain of 164.56 points.
Participants/Activity
On average shares of 398 companies were traded. Of these 188 were gainers and 188 were losers and 22 remained unchanged.
Foreigners were net seller $9.5m during the week; companies were seller by $1.53m, Banks were seller $7.83m; Mutual fund net buyer $2.03m, Insurance buyer $10.6m and Individual buyer 2.95m.
Volume leaders were: TRG Pakistan Ltd 163m; Unity Foods Ltd 145m; Pakistan Refinery 136m; Haspetrol Ltd 65m; Maple Leaf 54m; PIBTL Ltd 50m; Azgard Nine 35m; K-Elect 34m; Lotte Chemical 27m; Fauji Foods Ltd 23m; Ghani Global (R) 18m and Jahangir Sidd. Co. 16m.
Triggers
– The SBP’s foreign exchange reserves increased by $188 million to $13.298 billion during the week ended on Dec 4,2020. The total reserves $20.40 billion with Banks share $7.10 billion.
– The State Bank reported on Thursday that the Roshan Digital Account on Dec 9 received $7.7 million – the highest amount in a single day since the initiative was taken.
— 1.8 m tax returns filed by Dec 8 as compared to 1.73 returns until the last date of tax deadline of Dec 8, 2020.
— Mobile phone imports jump 90 percent. The Pakistan Telecommunication Authority announced that the imports of mobile devices via legal channels increased. Thus far in the ongoing calendar year 2020 more than 32.8m devices have been imported.
— Efforts of federal government underway to resolve K-Electric issues including transformation of shares to Shanghai Electric.
— Trade deficit for 5MFY21 remain flat YoY at $ 9.6 billion.
— China govt and Cos want to invest in $8 billion.
— The data released by SBP on Friday showed remittances in November clocked in at $2.34 billion up to 2.4 percent on month-month from October.
Conclusion
On Sunday, November 13, PDM is having its meeting to see if they are successful in a bid to topple the government. The following week trading depends on it. The government has made changes in its ministries Mr. Hafeez Shaikh is now made Finance Minister while Sheikh Rashid Ahmed is allocated the portfolio of Interior Ministry. All the macros stands positive for government.
Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd, Karachi.
Dated: December 12, 2020