Stock Watch

Stocks fails to keep up growing momentum
Summary

The stock market failed in the preceding week to sustain the growing pattern of previous week of 241 points. It declined 1.1% WoW on number of positive and negative factors, which affected the market. It declined below 47,000 to close at 46,636.08 on Friday.

A major concern was the declining rupee value from Rs.151.83 on May 14 to around Rs.169 per dollar now. The uncertainty in formation of Government in Afghanistan, there is pressure on buying dollar from Pakistan as Afghanistan dollar worth about $ 10 billion is being held up in foreign account. People of Afghanistan are allowed to carry $10,000 with them as per exchange rule. Besides, it could be planned non-intervention by the State Bank of Pakistan (SBP) in the market due to the upcoming 6th review of IMF with Pakistan at the end of the month. Besides alarm was raised as current account deficit balloons to $1.5 billion in August.

The investors too have eye on the Monetary Policy on 20th of September. The two probable options are i) no change or ii) and 25 bps increase. The impact of MSCI downgrade continue on and foreigners sold $10.88m this week. The security concerned cropped up in the minds of investors when suddenly hour before start of the NZ cricket series against Pakistan called off on security concerns. The lack of incentive offered in the oil Refinery Policy 2021 and lack of clarity on it was of great concern to the investors.

The KSE-100 Index decreased by 562.21 points to close at 46,636.08. Trading activity decreased by around 7% to average 400 million shares. The market capitalization decrease by Rs.120 billion to close at Rs.8,135 T. Out of 521 scrips,184 closed in positives,316 in negatives while value of 21 stocks remained unchanged. Byco Petroleum with 161m shares was the volume leader.

Monday: KSE-100 47,270.46 (+72.12) Vol 396 mn market Cap Rs.8,276 trillion.

Tuesday: KSE-100 46,891.34 (-379.12) Vol 480 mn Market Cap Rs,8,176 trillion.

Wednesday: KSE-100 46,716.72 (-174.62) Vol 333 mn Market Cap Rs8,152 trillion.

Thursday: KSE-100 46,920.46 (+203.74) Vol 405 mn Market Cap Rs.8,179 trillion.

Friday: KSE-100 46,636.08 (-284.36) Vol. 387mn Market Cap. Rs.8,135 trillion.

Participants/Activity

Foreigners were net seller $10.88m during the week; companies were seller by $6.39m, Banks were buyer $7.28m; Mutual fund net seller $2.25m individuals net buyer $16.78m and Insurance were buyer $9.40m.

Volume leaders during the were: Byco Petroleum 161m; World Call Telecom 129m; Services Fab (R) & Telecard 127m each; TPL Properties 62m; TRG Pak 57m; TPL Corp Ltd 51m; Unity Foods 24m; Azgard Nine & Hum Network 22m each and B.O.P 19m.

Participants: Av Companies 521; Gain 184; Loss 316 and Unchanged 21.

Triggers

SBP foreign exchange reserves remained unchanged at $20.022 billion during the week ended Sept 10, 2021. Reserves of the Commercial Bank $7.042 billion declined by $40 million while the total reserves of the country $27.0652 billion fell by 37 million during the week.

– Inflation measured through Sensitive Price Index (SPI) edged up for the 12 consecutive week recording the second highest of 1.31 per cent for the combine group for the period ended on Sept 16.

– The country’s food import bill widened by 50 per cent to $1.73 billion in the first two month of the current fiscal year (2MFY22).

– The textile, clothing exports grow 20 per cent in 2MFY22.

– The current account deficit increased by 81 per cent in August to $1.476m compared to July during this fiscal year (FY22).

– NIT with Rs.158 billion under the management has launched NIT-Islamic Money Market Fund with IPO date of the fund from Sept 20-22.

– Road shows begin for PSM revival.

– PSX wins Best Islamic Stock Exchange Award.

Conclusion

There are clear pressures of imports with slipping current account deficit and depreciating PKR against USD. The debate is likely to take place on September 20 whether it is better to be proactive than reactive. To curtail demand , it is interesting to see if Islamabad act. The hike recommendation even for 25 bps is for signaling.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research& Training (Pvt) Ltd, Karachi.
Dated: Sept 18, 2021

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