Stock Review.

• Author: Kazmi, Shabbir

Byline: Shabbir Kazmi

For the week ended 4th October 2019 the benchmark index of Pakistan Stock Exchange (PSX) closed at 33,033 points, up 3%WoW. After a choppy start of the market, cement companies remained in limelight after the hike in cement prices by up to Rs15/bag. It was further supported by the expectation of double digit growth in cement sales during September 2019, signaling a revival in construction activities. The momentum gained strength as key stakeholders from government assured their support to business community.

Investors' participation increased significantly with average daily traded volume rising to 223 million shares, up 106%WoW. Top performers during the week included: DGKC, CHCC, MLCF, GWLC and PIOC, while POL and FATIMA were the major losers. Based on NCCPL data, foreigners remained net sellers amounting to US$4.70 million. On the local side, Individuals were net buyer of US$4.36 million, while banks and insurance were net sellers of US$4.13 million and US$4.75 million, respectively.

Major news impacting the market included: 1) provisional revenue collection of Federal Board of Revenue (FBR) fetching Rs960 billion against quarterly envisaged target of Rs1,071 billion, 2) inflation for September 2019, rising to 11.37%, as compared to 10.49% in the previous month, 3) Army Chief, General Qamar Javed Bajwa meeting top business leaders to find ways to bolster the economy, 4) Pakistan's total public debt expected to climb to Rs45.6 trillion over the next five years and 5) foreign exchange reserves held by the central bank falling to a three-month low of US$7.7 billion during the week ended 27th September, 2019.

After a jubilant week, analysts expect the market to cool down and investors to set their eyes on upcoming result announcement where cyclical sectors might disappoint. On top of all, the upcoming FATF meeting scheduled for mid October holds key to market performance where a favorable outcome for Pakistan will set the tone for significant performance in medium term. However, as time approaches closer the divergent news flows might start to appear, which may keep the market volatile.

Reversing persistent pressures on equity benchmarks, September 2019 ended on an upswing. Foreign portfolio investors remained net sellers, offloading US$3.5 million in positions during the month, with net buys centered on Fertilizers (US$2.7 million) and Oil and Gas exploration (US$0.5 million), moderated by domestic participants, with...