Stock Watch

Index manages to end flat after wild fluctuations
Summary

The two issues one economic and the other political kept the investors guessing and bringing high and low in Pakistan Stock Exchange (PSX) index movement. The PSX started when the market dipped 647 points on Monday on aggressive foreign selling and ended at $4.02m. The overall foreign selling during the week was $13.33m. The index also lost 661.30 points on Wednesday on issue of the non-clarity of appointment of DG ISI by the government. The opposition tried to play on against the government on this issue which was finally cleared when a statement in this regard issued by the Information Minister, Fawad Chaudhry. Another issue of economic nature was the completion of IMF review successfully and the departure of Finance Minister Shaukat Tarin to USA for IMF meeting on October 11-17. The chances are the release of around $1 billion in near future by the IMF while the release of IMF positive fiscal indicators also created positive impact in the market.

During the week the KSE-100 Index increased by 344.29 points or 0.77 per cent to close at 44,821.53 points. Trading activity increased as daily average volume on ready was 373 million from 265 million shares previous week. Foreign investors remained net seller of $13.33m and total market capitalization increased by Rs.9 billion to Rs.7,795 trillion.

Monday: KSE-100 index at 43,829.35 Change (-647.90) Vol 227m Mkt Cap Rs.7,678 trillion.

Tuesday: KSE-100 index at 43,883.08 Change (+53.73) Vol 405m Mkt Cap Rs7,686 trillion.

Wednesday: KSE-100 index at 43,221.78 Change (-661.30) Vol 355m Mkt Cap Rs.7,583 trillion.

Thursday: KSE-100 index 44,333.68 Change (+1.111.90) Vol 389m Mkt Cap Rs 7,748 trillion.

Friday: KSE-100 index 44,821.53 Change (+487.45) Vol 489m Mkt Cap Rs7,795 trillion.

Participants/Activity

Foreigners were net seller $13,33m during the week; companies were seller $3.36m, Banks were buyer $1.53m; Mutual fund net buyers $3.40m individuals net seller $3.26m and Insurance were buyer $12.21m.

Volume leaders during the were: World Call 212m; Telecard 78m; Byco Petroleum 16m; Unity Foods 70m; Treet 64m; Hascol Petroleum 53m; Services Fabrics 34m; TRG Pak 23m; BOP 16m and Hum Network 8m.

Participation: Company avg 400; Gainers 187; Loser 213 and unchanged 20.

Triggers

— SBP reserves fall by $31 million to $19.138 billion during the week ended Oct 8. The overall reserves of the country were $25.969 billion while the holdings of the commercial bank were $6.831 billion during the week.

— Banks deposit jump by 17.4 per cent during the last 12 months as it stood Rs.19.828 trillion in Sept 2021 from Rs.16.886 trillion in Sept 2020.

— Non-traditional exports to traditional market surge by 60 percent; suggesting a greater degree of product diversification over the past five years.

— Petroleum prices likely to be raised up to Rs9.

— Dollar roars past Rs.171 in interbank as traded as high on Tuesday.

— Auto sales post robust growth in 1QFY22. Sales scenario of the entire auto sector during the first quarter of FY22 remained encouraging with 80.6% jump in car sales followed by 100% in jeeps; 95% in LCVs and 12% in farm tractors.

Conclusion

The IMF forecast Pakistan’s major fiscal indicators gradually improving this year and beyond until 2026. In one of the flagship publications Fiscal Monitor released report on Wednesday, the IMF estimated the government’s overall fiscal deficit at 6.2% of GDP, primary deficit at 0.4% of GDP and debt service levels at about 81% of GDP during the current fiscal year.

This shows improvement over the last fiscal year when fiscal deficit stood at 7.1% of GDP, primary deficit at 1.4% of GDP and general government debt at 83.4%. The fund projected that all key fiscal benchmarks would maintain improving trend over the next five years, showing overall better fiscal position.

Raees Uddin Khan,
Research & Development Institute of Securities Management Research & Training (Pvt) Ltd, Karachi.
Dated: October 16, 2021

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