Pakistan Stock Exchange continues recovery in shortened week

The week ended on 13th September 2019 was reduced to three trading days due to Ashura holidays. Coming-off from holidays, the benchmark index of Pakistan Stock Exchange (PSX) continued with the trend of earlier week and gained 3.3%WoW to close at 31,481 points. T-Bill Auction (where 12M yield declined by 31bps) seeded market expectations of a cut in discount rate, providing critical catalyst for market performance. Other news providing the impetus included: 1) positive news flows from ongoing meeting of APG, an associate of FATF, and 2) the Government of Pakistan reassuring meeting IMF targets on performance and structural benchmarks for 1QFY20, boosting investors’ sentiments. Average daily volume rose to 129.5 million as compared to 93.0 million a week ago.  Based on NCCPL data, foreigners remained net seller to US$1.01 million. On the local’s side, Mutual Funds emerged net buyer US$5.53 million, but individuals remained net sellers with US$4.8 million. Sectoral developments included: 1) Supreme Court (SC) moved for ‘out of turn’ hearing of GIDC case, 2) Fertilizer companies increasing retail price following delay in implementation of GIDC Ordinance and 3) Rs200 billion Energy Sukuk stuck with SBP owing to delay in issuance of sovereign guarantees. Top performers of the week included: KAPCO, POL, PPL, LUCK and BAFL, while laggards included: HASCOL, MLCF, GWLC and PIOC. With CPI numbers and the latest T-Bill auction pointing towards the end of the tightening cycle, monetary policy announcement scheduled for 16th September is likely to set market direction for next week. News flows relating to APG meeting would also influence the market sentiments.

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