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Stocks falter on fear of lockdown, index loses 1.3 wow
Summary

Turmoil developed over the weekend on the law and order front between the Tehreek-e-Labbaik Pakistan (TLP) and the law enforcement agencies (LEAS). On Monday heavy selling pressure brought down KSE-100 index below the 45,000 level. Government failed to persuade TLP to give up its planned march to Islamabad on Tuesday. During the weekend also Shaukat Fayaz Ahmed Tarin was appointed new Federal Finance Minister which helped boost the investors’ confidence who expecting change in economic strategy in coming days. There was a recovery of 600 points. The index closed at 44,913.57 with a decline of392.06 points from 4,305.63. Foreign investors, however, remained net buyers worth $0.24m. World Telecom was the volume leader with gain of Rs.013 to close at 1.69 Daily trading volume on ready counter increased to 363.097m shares as compared to 173.522 m traded in previous session on Friday.

On Tuesday, there was a rally of 486 points. After two inconclusive talk between TLP and LEAS, the third round of negotiation got under way by a special government team late on Monday which gave hope to the investors. Besides strong quarterly corporate earning started flowing in the market. The news of UAE of $ 2 billion deposit of Abu Dhabi Fund was another positive news for the market. The KSE-100 index surged by 486.21 points closing 45,399.78. Trading activity, however, remained low as daily volume decreased to 343m. Foreign investors remained net buyer worth $0.78m.

On Wednesday, NCOC Chairman Asad Umer warned on imposition of more restriction owing to worsening Covid-19 situation in the country. The KSE-100 index declined by 93.24 points to close at 45,306,54. Volume, however, improved to 388m while foreign investors remained net buyers worth $4,26m Stock closed bearish on concern of economic uncertainty as New Finance Minister Tarin was inducted. It is likely that tariff will rise for industrial to ease circular debt and sharp increase in oil prices were the cause of bearish close.

Despite strong corporate earnings announcement, the stock remained under pressure as KSE-100 index lost 376.93 points to close at 44,929.61. The trading volume declined 15pc to 329 shares on Thursday.

Market opened negatively on Friday and touched low of 44,363. It remained under pressure under announcement of country wide lockdown to be implemented. There was partial recovery and index closed at 44,706.76. Volume declined to 240m.

Participants/Activity

Foreigners were net buyer $7.29m during the week; companies were seller by $5.36m, Banks were seller $0.9m; Mutual fund net seller $7.72m individuals net seller $3.59m and Insurance were buyer $0.13m.

Volume leaders during the were: World Call 250m; Ghani Global Hold146m;TRG Pak 141m; Unity Foods 96m; Telecard 53m and Byco Petroleum31m.

Triggers

– Reserves fall $8m Total $23.212bn; SBP $16.043bn and Banks $7.168bn as on April 16, 2021.

– Govt raises Rs.708bn, cuts yield on T Bills on Wednesday.

– Auto-financing hits record Rs.285bn.

– SBP issues mechanism for house financing loan payment.

-MCB earns Rs.6.79bn profit in first quarter; HBL profit jumps 108pc, Meezan Bank income up 24pc in 1QCY21.

– IGFC to cut stake in Byco.

-Tarin given Finance portfolio in economic team shake up.

Conclusion

The new Finance Minister Mr. Shaukat Tarin has criticized by Asad Umer and Dr. Hafeez Shaikh for entering the government unprepared and reviving the IMF program with too harsh conditions.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd, Karachi
Dated: April 23, 2021

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