PSX Daily Market Review - 24th Oct 2019
Previous Session Recap
Trading volume at PSX floor increased by 33.33 million shares or 39.87% on DoD basis, whereas the benchmark KSE100 index opened at 33,277.36, posted a day high of 33,639.76 and a day low of 33,198.96 points during last trading session while session suspended at 33,439.69 points with net change of 240.73 points and net trading volume of 3.47 million shares. Daily trading volume of KSE100 listed companies increased by 3.47 million shares or 5.59% on DoD basis.
Foreign Investors remained in net selling positions of 2.95 million shares and net value of Foreign Inflow dropped by 0.52 million US Dollars. Categorically, Foreign Individual & Foreign Corporate remained in net selling positions of 0.12 and 12.70 million shares but Overseas Pakistanis investors remained in net buying positions of 9.86 million shares. While on the other side Local Individuals, Companies and Banks remained in net buying positions of 0.19, 5.70, and 0.83 million shares respectively but NBFCs, Mutual Fund, Brokers and Insurance Companies remained in net selling positions of 0.05, 1.88, 1.51 and 0.38 million shares respectively.
Analytical Review
Asian shares edge up as earnings, geopolitics sway sentiment
Asian shares pulled ahead on Thursday as corporate earnings and a ceasefire in northern Syria helped prop up sentiment, though the backdrop of trade and brexit uncertainties was enough to prevent a decisive shift towards riskier assets. MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4% with Japan’s Nikkei rising 0.66% to a one-year high. Australian shares climbed 0.5% while South Korea’s KOSPI eased 0.1%. South Korea earlier reported third quarter growth slightly below expectations, while a private survey showed Japanese factory activity shrank at the fastest pace in over three years in October, hurt by slowing global demand and trade frictions. Chinese shares opened higher with the blue-chip index rising 0.37%. Risk appetite was also aided after U.S. President Donald Trump lifted sanctions on Turkey saying a ceasefire in northern Syria was now permanent.
PM assures all efforts to complete SEZs on war footings
Prime Minister Imran Khan has said that no effort will be spared to ensure completion of Special Economic Zones (SEZs) on war footings. Chairing a meeting here on Wednesday to review progress on establishment of SEZs across the country, he said that all the initiatives for establishment of Special Economic Zones (SEZs) will be spearheaded by the federal government while taking the provinces on board. Imran Khan stressed that they should remain competitive in providing incentives for transfer of technology and relocation of industries from China on the lines of incentives being provided by other regional countries. He said that the present government has brought about significant improvements in ease of doing business in the country.
Nepra allows ex-Wapda Discos to transfer burden of Rs22.6b to consumers
National Electric Power Regulatory Authority (NEPRA) has Wednesday allowed ex-Wapda Discos to transfer the burden of Rs22.6 billion to the power consumers on the account of fuel price adjustment for the month of August 2019. In a notification issued here NEPRA has allowed an increase of Rs 1.6615 to ex-Wapda Discos on the account of fuel price adjustment for the month of August 2019. In a public hearing held on October 02, 2019 NEPRA had allowed an increase for the month of August and now it has been notified. In its petition for August, the CPPA had sought a tariff increase of Rs1.8672 per unit due to a hike in fuel prices. In its petition the CPPA pleaded that the actual pool fuel cost for the month of August 2019 was Rs5.0717/kWh, against the reference fuel cost component of Rs3.2045/kWh. The CCPA-G requested that it should be allowed to increase the rate by Rs1.8672 per unit. However Nepra has approved an increase of Rs1.66 per unit in the electricity tariff for power distribution companies.
Minister says over 700 ‘terror financing’ cases are near conviction
Just days after Pakistan escaped being blacklisted by the Financial Action Task Force (FATF), the government has disclosed that as part of the global watchdog’s action plan, more than 700 under-investigation suspected terror financing cases are near adjudication. Addressing a news conference on Wednesday, Minister for Economic Affairs Hammad Azhar, who was the chief negotiator on behalf of the country at the Paris-based FATF last week, eulogised the success of his government in dealing with terror financing and money laundering issues. “We have initiated these terror financing cases in the last six months,” he said, claiming that Islamabad’s efforts on that account were highly appreciated at the meeting. But the minister did not elaborate the number of cases nearing “conviction”.
Big industry contracts over 7pc in August
The country’s large-scale manufacturing output shrank for fifth month in a row, raising fears of massive layoffs across the industrial sector. The LSM index dipped by 7.06 per cent in the second month of this fiscal year from a year ago, the Pakistan Bureau of Statistics (PBS) reported on Friday. In comparison, the index had contracted by the first month of current fiscal year, LSM index shrank by 3.28pc while it fell 6.04pc year-on-year between July and August. In 2018-19, the three LSM sectors recorded a decline of 3.64pc against the target growth of 8.1pc, which the government has set at 3.1pc for 2019-20.
Asian shares pulled ahead on Thursday as corporate earnings and a ceasefire in northern Syria helped prop up sentiment, though the backdrop of trade and brexit uncertainties was enough to prevent a decisive shift towards riskier assets. MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4% with Japan’s Nikkei rising 0.66% to a one-year high. Australian shares climbed 0.5% while South Korea’s KOSPI eased 0.1%. South Korea earlier reported third quarter growth slightly below expectations, while a private survey showed Japanese factory activity shrank at the fastest pace in over three years in October, hurt by slowing global demand and trade frictions. Chinese shares opened higher with the blue-chip index rising 0.37%. Risk appetite was also aided after U.S. President Donald Trump lifted sanctions on Turkey saying a ceasefire in northern Syria was now permanent.
Prime Minister Imran Khan has said that no effort will be spared to ensure completion of Special Economic Zones (SEZs) on war footings. Chairing a meeting here on Wednesday to review progress on establishment of SEZs across the country, he said that all the initiatives for establishment of Special Economic Zones (SEZs) will be spearheaded by the federal government while taking the provinces on board. Imran Khan stressed that they should remain competitive in providing incentives for transfer of technology and relocation of industries from China on the lines of incentives being provided by other regional countries. He said that the present government has brought about significant improvements in ease of doing business in the country.
National Electric Power Regulatory Authority (NEPRA) has Wednesday allowed ex-Wapda Discos to transfer the burden of Rs22.6 billion to the power consumers on the account of fuel price adjustment for the month of August 2019. In a notification issued here NEPRA has allowed an increase of Rs 1.6615 to ex-Wapda Discos on the account of fuel price adjustment for the month of August 2019. In a public hearing held on October 02, 2019 NEPRA had allowed an increase for the month of August and now it has been notified. In its petition for August, the CPPA had sought a tariff increase of Rs1.8672 per unit due to a hike in fuel prices. In its petition the CPPA pleaded that the actual pool fuel cost for the month of August 2019 was Rs5.0717/kWh, against the reference fuel cost component of Rs3.2045/kWh. The CCPA-G requested that it should be allowed to increase the rate by Rs1.8672 per unit. However Nepra has approved an increase of Rs1.66 per unit in the electricity tariff for power distribution companies.
Just days after Pakistan escaped being blacklisted by the Financial Action Task Force (FATF), the government has disclosed that as part of the global watchdog’s action plan, more than 700 under-investigation suspected terror financing cases are near adjudication. Addressing a news conference on Wednesday, Minister for Economic Affairs Hammad Azhar, who was the chief negotiator on behalf of the country at the Paris-based FATF last week, eulogised the success of his government in dealing with terror financing and money laundering issues. “We have initiated these terror financing cases in the last six months,” he said, claiming that Islamabad’s efforts on that account were highly appreciated at the meeting. But the minister did not elaborate the number of cases nearing “conviction”.
The country’s large-scale manufacturing output shrank for fifth month in a row, raising fears of massive layoffs across the industrial sector. The LSM index dipped by 7.06 per cent in the second month of this fiscal year from a year ago, the Pakistan Bureau of Statistics (PBS) reported on Friday. In comparison, the index had contracted by the first month of current fiscal year, LSM index shrank by 3.28pc while it fell 6.04pc year-on-year between July and August. In 2018-19, the three LSM sectors recorded a decline of 3.64pc against the target growth of 8.1pc, which the government has set at 3.1pc for 2019-20.
Market is expected to remain volatile during current trading session.
Technical Analysis
The Benchmark KSE100 Index is moving in an upward price channel on daily chart and right now it's moving back after retesting supportive trend line of said channel, mean while it have completed 61.8% correction of its recent bearish rally and now initially it is being capped by a horizontal resistant region at 33,700 points and then a strong resistant trend line is falling a t 33,920 points. These both objects would try to cap index during current trading session and if index would not succeed in penetration above these regions on daily closing basis then it would got a push below its previous low to expand current bearish correction. Therefore it's recommended to stay cautious during current trading session and post trailing stop loss on existing long positions and start selling on strength with strict stop loss of 34,100 points. In case index would start a bearish rally then it's supportive regions are standing at 33,000 points and 32,700 points. Daily closing below 32,700 points would call for a short term sentiment change which may lead index for a new monthly low in coming days.
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