November 2015 was not a very rewarding month for the equities investors, wiping out almost all the gains made to date during 2015. The benchmark KSE-100 Index closed on a negative note at a two month low of 32,255, down 2,007 points from October closing at 34,262pts, down almost 6 percent MoM basis. Daily trading volumes also remained depressed at 171 million shares compared to average of 174 million shares in October and 183 million shares during September this year.
Index started the month on a high note, with all-time highs in sight, touching 34,523 points during the first week. However from there onwards the Index started retreating daily due to the pressure of foreign selling and SECP’s strict regulations of individual investors. Even though current macro-economic indicators are sound for the country, some sectors especially banks are under pressure because of SBP’s new interest rate corridor. Low international commodities and oil prices are also having an adverse impact on some sectors at local bourse. Last week of the month also witnessed a drop resulting from some uncertainty on political front of the country. Historically speaking, year ending months of November and December show negative numbers for the Index, as evident from the data of exchange for last two decades.
Both emerging and frontier markets moved in the negative direction during the month with Vietnam declining 9.43%MTD thus being the only worst performer of the month compared to Pakistan. Pakistan’s stock market was the second worst in the region with a MTD decline of 8.73%. However the performance was in line with regional peers, as all of them ended the month in red. During the month under review FIPI numbers showed net selling of US$53.1 million for the month as compared to net selling of US$48.2 million a month earlier, bringing the YTD selling to almost US$281 million, which though being alarming but is in line with other regional peers.
Macroeconomic indicators of the country remained solid, interest rates are favoring preference towards equity market to earn better returns; however some solidity is required in commodities prices and on political front, to help perform market in the right direction. Year ending financial results season could help provide the much needed trigger in the coming months. On economic side, events to keep eye include inflation numbers for November and upcoming IMF review to be completed during December.