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Stocks gain 0.9pc wow as jittery week witnessed
Summary

The week started with a bag of corporate results continued pouring for investors like PSO profit up by 48 percent, Habib Bank profit doubles to Rs31 billion. The IMF review, which concluded had its impact like IMF seeking new circular debt plan. However, the Government-IPPS deal got its sanction by the NAB. On the political front the matter of Senate election was taken up by Supreme Court. The voting for the bye-election began this week. On the Covid front the vaccine for people over 65 years started while cases seems to be under control and 2.8m doses of AstraZeneca vaccine will start arriving on March 2. Next week is crucial as FATAF meeting will start. Also there will be the rollover week for the investors.

The market during the week remained volatile and closed negative on Wednesday, Thursday and has modest gain on Friday, last day of the week. Overall KSE-100 Index gained 419 points while the average volume declined this week to 595m from 735m previous week. The market capitalization increased by Rs.76bn to close Rs.8.317 trillion.

After six days of losses; there was an impressive rally on Monday when the KSE-100 Index gained 567.23 points to close at 46,375.59. The volume too increased to 486m.

The boom in stocks continued on Tuesday as positive triggers like increase in remittances, growth in cement and automobile sales and local companies gaining foothold in international markets elevated investors confidence. The Index gained 492.36 points to closed at 46,867.95.

The market went for profit-taking on Wednesday after two days of bullish movement of stock and shed 99.81 points to close at 46,768.14. The volume was the highest of the week with 702m.

The investors went for introspection on Thursday over the IMF plan, which was released earlier and shed 635.40 points to close at 46,142.74. Investors were concerned over IMF demand to abolish Rs200 billion corporate income tax and draw new circular debt plan.

Finally on Friday, the market went high and low of 46,378 and 46,137 and finally closed at positive 84.91 points to 46,227.65. The wide fluctuation was that a couple of big funds decided to book profit at current high level and re-enter at around 45,000 mark.

Participants/Activity

On average shares of 413 companies were traded. Of these 208 were gainers and 190 were losers and 15 remained unchanged. Foreigners were seller $0.76m, Banks were seller $1.06m; Mutual fund net buyer $1.35m, Company buyer $5.52m, Insurance seller $9.06m and Individual buyers $1.58m.

Volume leaders were: Hum Network 215m; Telecard 194m; World Call Telecom 152; Dost Steel Mills 113m; Maple Leaf 108m; Byco Petroleum 89m; TRG Pak Ltd 62m; B.O.P 57m; Azgard Nine 49m and KEL 29m.

Triggers

— Textile exports jump 8 percent in 7MFY21. Textile and Clothing exports increased over eight percent to $8.76 billion on year on year basis in current fiscal year due measures like abolishing of duty and taxes on industrial raw material, paying off past pending refunds to exporters, devaluation of the rupee and lower interest rates.

— Alarm as eatables import bill rises by 51.9 percent to $4.64 billion year-on- year in seven months of 2020-21.

— SBP reserves fell by $59m to $12.889bn on week ended on Feb 12. The total reserves stand at $20.058bn while Banks $7.168 bn.

— PM cheers expatriates and expressed satisfaction over foreign exchange inflows via Roshan Digital Accounts (RDA) reached $500 million from 97 countries around the world in just five months.

— Weekly inflation for the combined group in the period ended on Feb 18 increased by 0.55 percent on the back of an uptick in price of essential food items ‘data released by PBS.

— Three new mobile firms to start local production as government recently promulgated an ordinance abolishing WHT on locally manufactured mobile sets in a bid to encourage assembling and eventually production of parts in the country.

— The Ministry of Commerce announced that it will register as GI, Himalayan pink salt. The move aims to curb unauthorized use of Pakistan’s GI by other countries.

Conclusion

The upcoming week will be rollover week, which will push the leveraged player to square their position. The prudent investor will remain cautious ahead of FATAF review around the corner. The result of by election this week and possible decision of SC on Senate voting could bring uproar for the market.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi
Dated: Feb 20, 2021

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