PSX Daily Market Review - 7th Jan 2020
Previous Session Recap
Trading volume at PSX floor dropped by 56.25 million shares or 17.42% on DoD basis, whereas the benchmark KSE100 index opened at 42,323.30, posted a day high of 42,323.30 and a day low of 41,296.24 points during last trading session while session suspended at 41,296.24 points with net change of -1027.06 points and net trading volume of 200.00 million shares. Daily trading volume of KSE100 listed companies dropped by 27.97 million shares or 12.27% on DoD basis.
Foreign Investors remained in net buying positions of 2.47 million shares and value of Foreign Inflow increased by 2.02 million US Dollars. Categorically, Foreign Individuals, Corporate and Overseas Pakistanis remained in net buying positions of 0.04, 0.72 and 1.71 million shares. While on the other side Local Companies, Banks, Brokers and Insurance Companies remained in net buying positions of 6.19, 3.51, 1.11 and 1.65 million shares but Local Individuals, NBFCs and Mutual Fund remained in net selling positions of 2.95, 0.97 and 12.79 million shares respectively.
Analytical Review
Asia stocks bounce, oil slips as Iran anxiety ebbs
Asian shares rebounded on Tuesday as a day passed without any new escalation in the Middle East and Wall Street erased early losses to end in the black as tech stocks climbed. Oil surrendered hefty gains as some speculated Iran would be unlikely to strike against the United States in a way that would disrupt supplies, and its own crude exports. Brent crude futures fell 54 cents to $68.37 a barrel, having been as high as $70.74 on Monday, while U.S. crude dropped 44 cents to $62.83. Gold also retreated to $1,557.54 an ounce, after scaling a near seven-year peak of $1,579.72 overnight.
ECC okays amendments to Nepra Act
Withdrawing a couple of key amendments on the objections of the power regulator, the Economic Coordination Committee (ECC) of the Cabinet on Monday cleared amendments to the Regulation of Generation, Transmission and Distribution of Electronic Power Act 1997 to meet conditions of the International Monetary Fund (IMF). The amendments to the Nepra Act are required under the IMF programme to recover additional cost of losses from consumers by imposing new surcharges aimed at financing power sector loans and generate more than Rs250 billion in annual revenue to address about Rs1.72 trillion worth of circular debt. The government has given an undertaking to the IMF to allow a fresh power tariff increase for covering the cost of capacity payments within the current month and to impose tariff surcharges through amendments to the Nepra Act so the regulator could determine and automatically notify quarterly tariffs under fresh benchmarks.
4pc growth target to be missed: SBP
Pakistan’s economy is unlikely to meet the GDP growth target of four per cent whereas inflation is expected to remain within the 11-12pc range, said the State Bank of Pakistan (SBP) in its first quarterly report of FY20 issued on Monday. Meanwhile, the bank estimates the current account deficit to remain low at 1.5-2.5pc in the ongoing fiscal year. The SBP said the agriculture output would be lower than target while the industrial sector’s performance would be subdued; only the services sector would be close to previous fiscal year.
Ecnec approves Rs261bn development projects
The Executive Committee of the National Economic Council (Ecnec) on Monday approved six development projects with a total estimated cost of Rs216.4 billion, including a hefty 47 per cent increase in the cost of Tarbela 4th Extension Project. The Ecnec meeting was presided over by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh. Majority of the projects approved by committee pertained to the World Bank funding. The meeting gave a go ahead for the Terbela 4th Extension Hydropower Project with a revised total cost of Rs122.9bn, according to an official statement. A participant told Dawn that the cost of the project — which has already started power generation — has gone up by more than 47pc to Rs123bn from its previously approved cost of Rs83.6bn.
2nd phase of Pak-China FTA-II, ease of doing business to unlock potential foreign exchange revenue
The Pakistan Hosiery Manufacturers & Exporters Association has welcomed the growth of 8.69 per cent in knitwear exports from the country during the first five months (July-Nov 2019-20) of the current financial year compared to the exports in the corresponding period last year, saying the industry is now eyeing on Chinese tariff concessions under FTA-II phase and ease of doing business to unlock the potential foreign exchange revenue from the value-added textile sector. According to data from the Pakistan Bureau of Statistics, approximately 51,240 thousand dozens of knitwear worth $1.320 billion were exported compared to 48,315 thousand dozens valuing $1.215 billion exported last year.
Asian shares rebounded on Tuesday as a day passed without any new escalation in the Middle East and Wall Street erased early losses to end in the black as tech stocks climbed. Oil surrendered hefty gains as some speculated Iran would be unlikely to strike against the United States in a way that would disrupt supplies, and its own crude exports. Brent crude futures fell 54 cents to $68.37 a barrel, having been as high as $70.74 on Monday, while U.S. crude dropped 44 cents to $62.83. Gold also retreated to $1,557.54 an ounce, after scaling a near seven-year peak of $1,579.72 overnight.
Withdrawing a couple of key amendments on the objections of the power regulator, the Economic Coordination Committee (ECC) of the Cabinet on Monday cleared amendments to the Regulation of Generation, Transmission and Distribution of Electronic Power Act 1997 to meet conditions of the International Monetary Fund (IMF). The amendments to the Nepra Act are required under the IMF programme to recover additional cost of losses from consumers by imposing new surcharges aimed at financing power sector loans and generate more than Rs250 billion in annual revenue to address about Rs1.72 trillion worth of circular debt. The government has given an undertaking to the IMF to allow a fresh power tariff increase for covering the cost of capacity payments within the current month and to impose tariff surcharges through amendments to the Nepra Act so the regulator could determine and automatically notify quarterly tariffs under fresh benchmarks.
Pakistan’s economy is unlikely to meet the GDP growth target of four per cent whereas inflation is expected to remain within the 11-12pc range, said the State Bank of Pakistan (SBP) in its first quarterly report of FY20 issued on Monday. Meanwhile, the bank estimates the current account deficit to remain low at 1.5-2.5pc in the ongoing fiscal year. The SBP said the agriculture output would be lower than target while the industrial sector’s performance would be subdued; only the services sector would be close to previous fiscal year.
The Executive Committee of the National Economic Council (Ecnec) on Monday approved six development projects with a total estimated cost of Rs216.4 billion, including a hefty 47 per cent increase in the cost of Tarbela 4th Extension Project. The Ecnec meeting was presided over by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh. Majority of the projects approved by committee pertained to the World Bank funding. The meeting gave a go ahead for the Terbela 4th Extension Hydropower Project with a revised total cost of Rs122.9bn, according to an official statement. A participant told Dawn that the cost of the project — which has already started power generation — has gone up by more than 47pc to Rs123bn from its previously approved cost of Rs83.6bn.
The Pakistan Hosiery Manufacturers & Exporters Association has welcomed the growth of 8.69 per cent in knitwear exports from the country during the first five months (July-Nov 2019-20) of the current financial year compared to the exports in the corresponding period last year, saying the industry is now eyeing on Chinese tariff concessions under FTA-II phase and ease of doing business to unlock the potential foreign exchange revenue from the value-added textile sector. According to data from the Pakistan Bureau of Statistics, approximately 51,240 thousand dozens of knitwear worth $1.320 billion were exported compared to 48,315 thousand dozens valuing $1.215 billion exported last year.
Market is expected to remain volatile during current trading session.
Technical Analysis
The Benchmark KSE100 index have created an evening shooting star on daily chart inside its rising wedge but it could not succeed in giving a breakout of its wedge in downward direction. it closed on supportive line of that wedge there it's expected that an intraday pull back could be witnessed during current trading session and index would try retest its resistant regions at 41,770 points and breakout above said region would call for 42,070 points. It's recommended to stay cautious and wait for a clear breakout either above 42,200 points or below 40,950 points before initiating new positions. Index would not enter into bearish zone until it would succeed in closing below 40,000 points on daily chart. As of today index have supportive regions at 40,950 points and breakout below that region would call for 40,300 points in coming days.
To Open picture in original resolution right click image and then click open image in a new tab
Disclaimer
Information and opinions contained herein have been compiled or arrived at by Us from publicly available information and sources that We believe to be reliable. Whilst every care has been taken in preparing this research report, no research analyst, director, officer, employee, agent or adviser of any member of Our Team gives or makes any representation, warranty or undertaking, whether express or implied, and accepts no responsibility or liability as to the reliability, accuracy or completeness of the information set out in this research report. This research report is for information purposes only and does not constitute nor is it intended as an offer or solicitation for the purchase or sale of securities or other financial instruments. Neither the information contained in this research report nor any future information made available with the subject matter contained herein will form the basis of any contract.
High Risk Investment
Trading foreign exchange, Commodities and Equities (Stocks) on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, Commodities and Equities (Stocks) you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your initial investment. You should be aware of all the risks associated with foreign exchange, Commodities and Equities (Stocks) trading and seek advice from an independent financial advisor if you have any doubts.
Market Opinions
Any opinions, news, research, analyses, prices or other information contained on in this report is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Accuracy of Information
The content of this report is provided for the sole purpose of assisting traders to make independent investment decisions. We have taken reasonable measures to ensure the accuracy of the information on the website; however, it does not guarantee accuracy and will not accept liability for any loss or damage which may arise directly or indirectly from the content or from your inability to assess the report, or for any delay in or failure of the transmission or the receipt of any instruction or notifications sent through this report.