Morning Market Brief 14th April. 2021

Technical Overview

The Benchmark KSE100 index have faced rejection from a descending trend line during last trading session and have created a double top on daily chart therefore it's recommended to stay cautious because index is facing resistances around its correction level along with a major resistant region which previously have pushed it towards its 74.6% correction of its last bullish rally. As of now it's expected that index would face major resistance between 45,200pts-45,350pts region and in case of bullish breakout above this region next targets would be 45,500pts and 45,860pts but it's recommended to stay cautious and post trailing stop loss on existing long positions because index seems losing its strength and in case it would not succeed in giving a breakout above 45,200pts in daily chart selling pressure would start increasing. For current trading session its recommended to stay on selling side with strict stop loss of 45,350pts as index would start sliding towards 44,500pts after facing rejection from its major resistant regions. While in case of penetration below 44,500pts once again sentiment would start converging towards bearish side and index would try to expand its current pull back in bearish direction. Overall a volatile session could be witnessed today.

Regional Markets

World stocks hit record high as bond yields ease with inflation fears

Global equity markets rose to a fresh record high on Wednesday as bond yields eased after data showed U.S. inflation was not rising wildly. Most Asia-Pacific share indexes followed Wall Street higher, with Hong Kong’s Hang Seng leading gains in the region, while benchmark U.S. Treasury yields continued their decline, marking a fresh three-week low. Japan bucked the trend, with the Nikkei falling 0.4% as rising coronavirus cases raised doubts about an economic reopening with 100 days to go until Tokyo is scheduled to host the Olympics. The U.S. consumer price index rose 0.6%, the biggest increase since August 2012, as rising vaccinations and fiscal stimulus unleashed pent-up demand. But the data is unlikely to change Federal Reserve Chair Jerome Powell’s view that higher inflation in coming months will be transitory. Powell is scheduled to speak later in the day at the Economic Club of Washington.Read More...

Business News

Private sector borrowing jumps 34pc

Private sector borrowing from banks increased by 34 per cent during the first nine months of this fiscal year, reported the State Bank of Pakistan on Tuesday. The SBP data showed that the private sector borrowed Rs444.5 billion during July-March 2020-21 against Rs332bn in the corresponding period last year. Economic activities this year are better than the pre-Covid period of FY20 and the private sector is likely to surpass borrowing figure of FY19 (Rs693.5bn) by end of this fiscal year. During FY20, the sector’s could borrow Rs196bn mainly due to emergence of Covid-19 in the fourth quarter. The International Monetary Fund has recently said the economic growth rate for FY21 will be around 1.5 per cent while the World Bank says the GDP growth would be 1.3 per cent.Read More...

Big industrial output expands 4.85pc in February

Large-scale manufacturing (LSM) grew by 4.85 per cent in February reflecting a slowdown in the industrial output, data released by Pakistan Bureau of Statistics showed on Tuesday. On a month-on-month basis, big industry production contracted by 4.15pc. The LSM expansion slowed in January after posting double-digit growth in December and November on the back of higher automobile, cement products, and one-time sugar output which reflects the revival of industrialisation. In December and November 2020, LSM grew by 11.4pc and 14.5pc on a year-on-year basis.Read More...

Govt sets economic growth target at 4.2pc for FY22

In a clear footprint of the International Monetary Fund (IMF) programme, the Federal Cabinet on Tuesday approved the Budget Strategy Paper (BSP) for next fiscal year (FY22) envisaging significantly higher contribution from provinces to finance fiscal deficit and almost a freeze on major expenditures like defence, pension and running of civil government to ensure enough funding for higher interest payments. The BSP targets economic growth rate of 4.2 per cent for next year, about 8pc rate of inflation, budget deficit at 6pc of GDP and 84.3pc of public debt to GDP ratio. Gross federal revenues are estimated to go up by more than 25pc to Rs7.99 trillion as the government pushes forward a series of tax adjustments like widening of GST and income tax net, besides continually banking on a number of non-tax revenues like petroleum levy and so on.Read More...

Car sales surge by over 31pc in 9MFY21

Barring slight reduction in sales of heavy vehicles, the entire auto sector enjoyed robust growth in the nine months of the current fiscal year (9MFY21), with car sales going up 31.5 per cent. Sales of jeeps were up 157.6pc in 9MFY21, followed by light commercial vehicles/pickups which grew by 41.4pc, tractors 57.2pc and two/three-wheelers 22pc. Atlas Honda Limited (AHL) broke its highest-ever production and sales records of two-wheelers with 125,442 and 125,030 units during March 2021 from its previous milestone of 116,024 and 116,000 units achieved during October 2020.Read More...