Previous Session Recap
Trading volume at PSX floor dropped by 33.95 million shares or 8.49% on DoD basis, whereas the benchmark KSE100 index opened at 43,289.94, posted a day high of 43,453.34 and a day low of 43,037.72 points during last trading session while session suspended at 43,218.67 points with net change of -37.47 points and net trading volume of 199.07 million shares. Daily trading volume of KSE100 listed companies dropped by 104.50 million shares or 34.42% on DoD basis.
Foreign Investors remained in net selling positions of 1.00 million shares but value of Foreign Inflow increased by 1.29 million US Dollars. Categorically, Foreign Individuals and Overseas Pakistanis remained in net selling positions of 0.02 and 2.81 million shares but Foreign Corporate remained in net buying positions of 1.83 million shares. While on the other side Local Companies, Banks, NBFCs, Mutual Fund and Insurance Companies remained in net selling positions of 8.09, 0.76, 0.39, 0.07 and 3.29 million shares but Local Individuals and Brokers remained in net buying positions of 11.04 and 3.23 million shares respectively.
Analytical Review
Asian stocks rally to record high ahead of trade deal; yen slips
Asian share markets rose on Tuesday and safe-haven assets slid as signs of goodwill between China and the United States supported optimism for global growth, with the world’s two biggest economies preparing to formalize a trade-war truce. The U.S. Treasury Department on Monday said China should no longer be designated a currency manipulator - a label it applied as the yuan slid in August. China, meanwhile, has allowed the tightly managed currency to climb to its highest point since July. China’s offshore yuan extended strong gains to the dollar on Tuesday morning to a 5-1/2-month high, supported by rising optimism toward Sino-U.S. trade developments. The offshore yuan surged to a high of 6.8745 per dollar, the firmest level since July 26. The moves come as a high-level Chinese delegation arrived in Washington ahead of Wednesday’s signing of the Phase 1 trade agreement, a step toward de-escalating a prolonged dispute that has hurt the world economy.
Fitch reaffirms Pakistan’s rating at B-, outlook stable
Noting weak external and fiscal positions and slowing economy, Fitch Ratings on Monday affirmed Pakistan’s long-term Foreign Currency issuer default rating at ‘B-negative’ with a stable outlook. The New York-based agency — one of the three major global rating agencies — noted high debt-to-GDP ratio, economic growth rate of 2.8 per cent and fiscal deficit at the elevated 7.9pc level besides high inflation and interest payments and weaker revenue growth as key weaknesses. It said the tighter macroeconomic policies were further slowing GDP growth, estimated at 2.8pc in FY20 from 3.3pc in FY19 and gradually recovery to 3.4pc by FY21. Inflation has also continued to rise sharply from the cost pass-through of the currency depreciation and increases in energy tariffs.
SMEDA, UHE ink MoU for young entrepreneur development
Small and Medium Enterprises Development Authority (SMEDA) and University of Home Economics (UHE) on Monday signed a Memorandum of Understanding (MoU) to collaborate and extend expertise for promotion of young entrepreneurs, particularly women entrepreneurship with an understanding to work towards the development of a positive entrepreneurial culture in the region. SMEDA General Manager Raja Hassanien Javed and UHE Vice Chancellor Dr. Kanwal Ameen signed the MoU document on behalf of their respective sides in the presence
Weekly inflation up 0.36pc
The Sensitive Price Indicator (SPI) based weekly inflation for the week ended on January 09, for the combined consumption group, increased by 0.36 percent as compared to the previous week. The Sensitive Price Indicator (SPI) for the week under review in the above mentioned group was recorded at 132.32 points against 131.84 points registered in the previous week, according to the latest data released by the Pakistan Bureau of Statistics (PBS). The weekly SPI with base year 2015-16=100 is covering 17 urban centers and 51 essential items for all expenditure groups. The Sensitive Price Indicator for the lowest consumption group up to Rs 17,732 witnessed 0.45 percent increase and went up from 135.21 points in last week to 135.82 points during the week under review. As compared to the corresponding week of last year, the SPI for the combined consumption group in the week under review witnessed an increase of 20.07 percent, while, for the lowest group, it increased by 19.15 percent.
Cars sale falls 38pc in December
The sale of cars in December 2019 fell sharply to 9,987 units compared to the sale of 16,141 units in same month of the preceding year, showing a decline of 38.12 percent. During first half (July-December) of the current fiscal year, the auto sale also fell sharply by 43.19 percent from 104,038 units in the period July-December (2018-19) to 49,110 units in first six months of current fiscal year, data released by Pakistan Automotive Manufacturing Association (PAMA) on Monday said. According to break up figures, the sale of Honda cars (Civic and City) fell to 884 units in December this year from 1,989 units in December last year. In total during first six months of current fiscal year, the sale of Honda cars went down to 6,919 units from 21,784 units in July-December (2018-19), showing a decline of 68.34%.
Asian share markets rose on Tuesday and safe-haven assets slid as signs of goodwill between China and the United States supported optimism for global growth, with the world’s two biggest economies preparing to formalize a trade-war truce. The U.S. Treasury Department on Monday said China should no longer be designated a currency manipulator - a label it applied as the yuan slid in August. China, meanwhile, has allowed the tightly managed currency to climb to its highest point since July. China’s offshore yuan extended strong gains to the dollar on Tuesday morning to a 5-1/2-month high, supported by rising optimism toward Sino-U.S. trade developments. The offshore yuan surged to a high of 6.8745 per dollar, the firmest level since July 26. The moves come as a high-level Chinese delegation arrived in Washington ahead of Wednesday’s signing of the Phase 1 trade agreement, a step toward de-escalating a prolonged dispute that has hurt the world economy.
Noting weak external and fiscal positions and slowing economy, Fitch Ratings on Monday affirmed Pakistan’s long-term Foreign Currency issuer default rating at ‘B-negative’ with a stable outlook. The New York-based agency — one of the three major global rating agencies — noted high debt-to-GDP ratio, economic growth rate of 2.8 per cent and fiscal deficit at the elevated 7.9pc level besides high inflation and interest payments and weaker revenue growth as key weaknesses. It said the tighter macroeconomic policies were further slowing GDP growth, estimated at 2.8pc in FY20 from 3.3pc in FY19 and gradually recovery to 3.4pc by FY21. Inflation has also continued to rise sharply from the cost pass-through of the currency depreciation and increases in energy tariffs.
Small and Medium Enterprises Development Authority (SMEDA) and University of Home Economics (UHE) on Monday signed a Memorandum of Understanding (MoU) to collaborate and extend expertise for promotion of young entrepreneurs, particularly women entrepreneurship with an understanding to work towards the development of a positive entrepreneurial culture in the region. SMEDA General Manager Raja Hassanien Javed and UHE Vice Chancellor Dr. Kanwal Ameen signed the MoU document on behalf of their respective sides in the presence
The Sensitive Price Indicator (SPI) based weekly inflation for the week ended on January 09, for the combined consumption group, increased by 0.36 percent as compared to the previous week. The Sensitive Price Indicator (SPI) for the week under review in the above mentioned group was recorded at 132.32 points against 131.84 points registered in the previous week, according to the latest data released by the Pakistan Bureau of Statistics (PBS). The weekly SPI with base year 2015-16=100 is covering 17 urban centers and 51 essential items for all expenditure groups. The Sensitive Price Indicator for the lowest consumption group up to Rs 17,732 witnessed 0.45 percent increase and went up from 135.21 points in last week to 135.82 points during the week under review. As compared to the corresponding week of last year, the SPI for the combined consumption group in the week under review witnessed an increase of 20.07 percent, while, for the lowest group, it increased by 19.15 percent.
The sale of cars in December 2019 fell sharply to 9,987 units compared to the sale of 16,141 units in same month of the preceding year, showing a decline of 38.12 percent. During first half (July-December) of the current fiscal year, the auto sale also fell sharply by 43.19 percent from 104,038 units in the period July-December (2018-19) to 49,110 units in first six months of current fiscal year, data released by Pakistan Automotive Manufacturing Association (PAMA) on Monday said. According to break up figures, the sale of Honda cars (Civic and City) fell to 884 units in December this year from 1,989 units in December last year. In total during first six months of current fiscal year, the sale of Honda cars went down to 6,919 units from 21,784 units in July-December (2018-19), showing a decline of 68.34%.
Market is expected to remain volatile during current trading session.
Technical Analysis
The Benchmark KSE100 index was caged in an upward price wedge and right now it's trying to penetrate outside of this in upward direction, It's expected that index would try to close above resistant trend line of this wedge today if it would succeed in maintaining above 42,850 points on hourly chart. It's recommended to stay cautious and start swing trading until index close this week because index have reached its crucial resistant regions and if it would not succeed in closing above 43,860 points on daily or weekly chart then it could slide downward to start a correction. Daily momentum indicators are in uncertain situation as Stochastic and RSI are in bullish mode but MACD have started a bearish trend and it's not expanding itself with market's new highs. It's expected that index would face strong resistances at 43,620 points and 44,250 points from two strong horizontal resistant regions. Mean while 61.8% correction of monthly and weekly charts is being completed at 43,800 points. Therefore it's recommended to post trailing stop loss on existing long positions.
While on flip side it's recommended to avoid initiating short positions until index generate a clear reversal sign or pattern. It would try to find supports at 42,300 and 41,780 points in case of any pressure but index would not enter into bearish zone until it would not succeed in closing below 41,500 points initially and bearish sentiment would get confirmation once index would close below 40,000 points.
While on flip side it's recommended to avoid initiating short positions until index generate a clear reversal sign or pattern. It would try to find supports at 42,300 and 41,780 points in case of any pressure but index would not enter into bearish zone until it would not succeed in closing below 41,500 points initially and bearish sentiment would get confirmation once index would close below 40,000 points.
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