PSX Daily Market Review - 23rd May 2019

Trading volume at PSX floor increased by 49.97 million shares or 32.55% on DoD basis, whereas the benchmark KSE100 index opened at 33,618.29, posted a day high of 34,698.56 and a day low of 33,618.29 points during last trading session while session suspended at 34,637.14 with net change of 1,195.04 points and net trading volume of 140.77 million shares. Daily trading volume of KSE100 listed companies increased by 13.15 million shares or 10.3% on DoD basis.
Foreign Investors remained in net selling positions of 2.32 million shares and net value of Foreign Inflow dropped by 3.48 million US Dollars. Categorically, Foreign Corporate Investors remained in net selling positions of 5.12 million shares but Overseas Pakistanis remained in net buying positions of 2.8 million shares. While on the other side Local Individuals, Banks, NBFCs and Mutual Funds remained in net buying positions of 26.71, 1.96, 1.15 and 0.97 million shares respectively but Local Companies, Brokers and Insurance Companies remained in net selling positions of 20.1, 2.85 and 2.21 million shares respectively.

Asia shares sink to four-month low, yen a safe harbor
Asian shares carved out a four-month trough on Thursday amid worries the Sino-U.S. trade conflict was fast morphing into a technology cold war between the world’s two largest economies. Late Wednesday, Reuters reported the U.S. administration was considering Huawei-like sanctions on Chinese video surveillance firm Hikvision over the country’s treatment of its Uighur Muslim minority, according to a person briefed on the matter. After the United States placed Huawei Technologies on a trade blacklist last week, British chip designer ARM has halted relations with Huawei in order to comply with the blockade.
Govt to earmark Rs1.8tr for development budget
The Annual Plan Coordination Committee (APCC) will meet today (Thursday) to finalise the development budget for fiscal year 2019-20 where, according to sources, the federal government would put forward a recommendation of Rs1.8 trillion for the annual uplift budget. The meeting, which is due for the day, had been postponed twice earlier this month on May 9 and May 20. As per the sources, Rs925 billion would be allocated for Public Sector Development Programme (PSDP) whereas Rs912 billion would be fixed for provincial development under Asian Development Bank.
New petroleum policy on the anvil, says PM
Prime Minister Imran Khan said on Wednesday the government was formulating a new petroleum policy to provide incentives to the oil exploration and production (E&P) companies working in the country. “In order to capitalise on the potential of the sector, the government is working on a new petroleum policy, offering incentives to foreign E&P companies and removing impediments to undertaking smooth and profitable business ventures,” Mr Khan was quoted as saying during his meeting with the chief executive officer of the Kuwait Petroleum, Shaikh Nawaf Saud Al-Sabah, who called on him along with a delegation. Federal Energy Minister Omar Ayub Khan, Punjab’s Energy Minister Dr M. Akhtar Malik and Petroleum Secretary Mian Asad Hayauddin were also present on the occasion.
Fitch Solutions sees no more rate hike in 2019
Fitch Solutions has forecast no more interest rate hike in Pakistan during the year as it sees downward inflationary pressure after a recent hefty increase in the policy rate by the central bank that would put a floor under the tumbling rupee. The research arm of Fitch Ratings in a report said the 150 basis point interest rate hike would support stabilisation in inflation over the coming months.“In particular, the interest rate hike has brought the real interest rate firmly into positive territory of around 3.5 percent, which should help to stabilise the rupee and hence prices of imported goods,” it said.
Budget deficit jumps to record Rs1.9 trillion in just nine months
Pakistan’s budget deficit has swelled to record Rs1.9 trillion (5 percent of GDP) in just nine months due to massive increase in expenditures and shortfall in tax collection. The country’s expenditures have enhanced to Rs5.51 trillion as compared to the revenues of Rs3.58 trillion during nine months (July to March) of the current fiscal year. The budget deficit was recorded at Rs1.9 trillion (5 percent of the GDP), according to the latest data of ministry of finance. The deficit was only 4.3 percent of the GDP (Rs1.48 trillion) in the same period of previous fiscal year. The deficit is rapidly enhancing due to the whopping increase in expenditures especially in interest payment. Meanwhile, the government is also facing record shortfall in tax collection, which is another reason behind widening of budget deficit . The incumbent government had introduced two mini budgets and slashed the development budget to control the deficit. Interestingly, the austerity plan announced by Prime Minister Imran Khan has also failed to control the expenditures of the country. The deficit has touched all-time high Rs1.9 trillion in nine months’ period.

TRG, DGKC, PAEL, SNGP and ENGRO would try to lead the positive momentum while ASL, GATM and SEARL would remain in laggards.

The Benchmark KSE100 Index have succeeded in formation of a morning shooting star on daily chart and with this formation it also have penetrated above its initial major resistant region of 34,500 points during last trading session. As of now daily and weekly momentum indicators have turned to strongly bullish sentiment side but hourly momentum indicators seems to start losing momentum for an intraday correction. Index would face its major resistance at 35,500 points where a strong resistant trend line along with a horizontal resistant region would try to cap current bullish sentiment, Initially index would face resistances at 34,900, 35,300 and 35,500 points but if index would succeed in maintaining above 34,860 points till this weekend then a bullish engulfing pattern would be formatted on weekly chart which would try to pump some fresh volumes in market. While on flipside index would find supportive regions at 34,100 and 33,800 points in case of any bearish pressure. It's recommended to post trailing stop loss on existing long positions while waiting for a dip to initiate new long positions would be much beneficial.