PSX Daily Market Review - 12th June 2019

Trading volume at PSX floor increased by 25.2 million shares or 27.47% on DoD basis, whereas the benchmark KSE100 index opened at 34,567.55, posted a day high of 34,798.60 and a day low of 34,267.59 points during last trading session while session suspended at 34,659.85 with net change of 92.3 points and net trading volume of 93.1 million shares. Daily trading volume of KSE100 listed companies increased by 18.21 million shares or 24.32% on DoD basis.
Foreign Investors remained in net selling positions of 6.29 million shares and net value of Foreign Inflow dropped by 0.32 million US Dollars. Categorically Foreign Corporate and Overseas Pakistani investors remained in net selling positions of 2.92 and 3.37 million shares. While on the other side Local Individuals, Mutual Funds, Brokers and Insurances Companies remained in net buying positions of 8.30, 0.67, 1.36 and 1.48 million shares respectively but Local Companies, Banks and NBFCs remained in net selling positions of 3.39, 0.54 and 0.09 million shares.

Asia shares wary of Trump, wait on U.S. inflation
Asian share markets were in a wary mood on Wednesday as the White House took a tough line on trade talks with China, while a looming reading on U.S. inflation could shuffle the odds for an early cut in interest rates there. Data on Chinese inflation showed the annual pace picked up to a 15-month high of 2.7%, but only because surging pork prices pushed up the cost of food. Excluding food, inflation rose only 1.6% and suggested there was plenty of scope for more stimulus. Market moves were modest, with MSCI’s broadest index of Asia-Pacific shares outside Japan off 0.38% after two days of gains. Japan’s Nikkei dithered either side of flat, while Shanghai blue chips eased 0.5% following a 3% jump the day before. E-Mini futures for the S&P 500 hardly budged.
RCCI concerned over Economic Survey results
The Rawalpindi Chamber of Commerce and Industry (RCCI) has shown grave concerns on Economic Survey results and feared for further harassment from FBR in upcoming fiscal budget 2019-20. Addressing a press conference at Chamber House here on Monday, RCCI President Malik Shahid Saleem said it was a surprise and very distressful that government missed all key economic targets. The GDP growth target was 6.3pc set by the previous government and survey shows that Pakistan’s economic growth in the financial year ending in June is expected to hit 3.3 per cent, well below the target of its target. The big blow was witnessed in the industrial sector that registered a growth of 1.4pc against the target of 7.6pc, the large scale manufacturing (LSM) showed a negative growth of 2pc against the target 8.1pc and the service sector grew by 4.7pc against the target of 6.5pc, while the construction sector achieved the growth of 7.6pc against a 10pc target.
Budget draws mixed reaction
The federal budget for 2018-19 has evoked mixed reaction from businessmen and industrialists. The business community of Khyber Pakhtunkhwa has rejected the federal budget for financial year 2019-20 and termed it as anti-masses, which will bring a tsunami of inflation after imposition of huge burden of taxes proposed in budget. Speaking at a news conference after the presentation of federal budget, Sarhad Chamber of Commerce and Industry (SCCI) president Faiz Muhammad Faizi said that it apparently seems that imposition of number of taxes in the budget would further bring down foreign investment and will affect poor segment of society. He added the proposed increase of tax on sugar from 6 to 17 per cent, federal excise duty on oil/ghee, as well as 17 per cent tax on bakeries/confectioner items would directly affect poor masses.
Provinces to get Rs3.2 trillion under NFC award
Provinces will get Rs3.25 trillion under the National Finance Commission (NFC) award in the next financial year — an increase of Rs790 billion over their share of Rs2.45tr in the outgoing fiscal year. “In accordance with the framework for distribution of resources structured by the 7th NFC award, provincial share in federal taxes and straight transfers to provinces are estimated at Rs3,254,526 million for fiscal year 2019-20, reflecting an increase of 32.2 per cent over revised estimates of 2018-19,” a budget document reads. Punjab will get Rs1.61tr under the NFC award as against its share of Rs1.20tr during the current financial year, reflecting an increase of Rs410bn. Sindh will have a share of Rs814.91bn as compared to the Rs616.26bn it received during the current financial year.
National development outlay for 2019-20 set at Rs1.837tr
The government has set the national development outlay for 2019-20 at Rs1.837 trillion, including foreign assistance of Rs237 billion. According to Planning Minister Khusro Bakhtiar, the development outlay comprises Rs675bn as the federal Public Sector Development Programme (PSDP), including foreign assistance of Rs127bn, and Rs912bn as provincial annual development plans (ADPs), including Rs110bn in foreign assistance. The size of the development outlay for 2019-20 has been reduced as compared to Rs2,043bn allocated in the outgoing financial year. The planning minister says the government’s ambition to pursue a development agenda at rapid pace is constrained by limited fiscal space. The plan document shows the foreign aid sought for development for the next year has also been curtailed as compared to Rs339bn of 2018-19. The federal PSDP and provincial ADPs also showed a declining trend.

ATRL, NETSOL, SNGP, NML and NCL would try to lead the positive momentum while EFOODS, MLCF and ISL would remain in laggards.

The Benchmark KSE100 Index have succeeded in maintaining above 34,400 points at day end during last trading session and it's expected that index would gain strength if it would not penetrate below this level on daily or weekly closing. As of now index have major supportive regions 34,400 and 33,800 points and breakout below 33,800 would call for a new low on daily chart which may extend towards 31,700 and 30,300 points but if index would succeed in starting a pull back and penetrated above 35,500 then its targets would be 36,300 and 37,500 points on short term basis. As index already have completed its 50% correction of last bullish rally and have filled a gap on daily chart so chances of getting strengthen have been increased therefore it's recommended to start buying chunks with strict stop loss and avoid short selling until unless index succeed in sliding below 33,800 points. Initiating long positions between 34,400 & 33,800 with strict stop loss of 33,800 could be beneficial and it's recommended to adopt swing trading till clear breakout of either 35,500 or 33,800 points.