Previous Session Recap
Trading volume at PSX floor increased by 10.02 million shares or 4.66% on DoD basis, whereas the benchmark KSE100 index opened at 39,715.04, posted a day high of 39,866.46 and a day low of 39,057.53 points during last trading session while session suspended at 39,199.68 points with net change of -96.62 points and net trading volume of 175.62 million shares. Daily trading volume of KSE100 listed companies also increased by 17.72 million shares or 11.22% on DoD basis.
Foreign Investors remained in net selling positions of 3.84 million shares and value of Foreign Inflow dropped by 4.97 million US Dollars. Categorically, Foreign Individuals and Overseas Pakistani remained in net long positions of 0.067 and 8.98 million shares but Foreign Corporate remained in net selling positions of 12.89 million shares respectively. While on the other side Local Companies, NBFCs, Mutual Fund, Brokers and Insurance Companies remained in net long positions of 10.36, 0.05, 10.28, 3.49 and 1.28 million shares but Local Individuals and Banks remained in net selling positions of 8.88 and 1.30 million shares respectively.
Analytical Review
Asian shares struggle for traction as Fed cut fails to lift confidence
Asian shares wobbled on Wednesday and bonds held gains, as an emergency rate cut from the U.S. Federal Reserve did little to soothe investor fears over the coronavirus’s widening fallout.The surprise 50 basis point cut came with commentary highlighting the limits of monetary policy, and Wall Street indexes fell sharply, gold surged and the dollar sank. The yield on benchmark 10-year U.S. Treasuries, which falls when prices rise, hit a once unimaginable low of 0.9060%. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged 0.2% higher, after easing hopes drove gains on Tuesday. Australia's S&P/ASX 200 index fell 1.2% and Japan's Nikkei .N225 was either side of flat in choppy trade.
Enhanced wheat procurement to increase subsidy burden
The government decision to increase the state’s already large footprints in the country’s heavily controlled wheat market through its enhanced purchases of 8.25 million tonnes of staple grain from growers this year will significantly increase its subsidy burden. The targeted procurement is over 30 per cent of the total projected wheat harvest of 27m tonnes this year and more than 60pc of the crop surplus that will be brought to the market. With the support price increased from Rs32,500/tonne to Rs34,125/tonne for the fresh harvest commencing in Sindh from this month and in Punjab from April, the decision means that the federal government and provinces will acquire new loans of Rs281.5 billion from the banks at commercial interest rates to finance their purchases.
FBR needs to collect Rs2.5 trillion in just four months to reach target
The Federal Board of Revenue (FBR) would have to collect Rs2.5 trillion in just four months to achieve the annual revised tax collection target during ongoing fiscal year, which seems challenging. The FBR is struggling to meet the revised tax collection target of Rs5.27 trillion during current financial year. Earlier, the target was downward revised to Rs5.55 trillion after FBR was continuously failing to achieve the monthly tax collection targets. The FBR had so far faced massive shortfall of Rs484 billion in eight months (July to February) of the year 2019-20. According to provisional figures, the FBR has collected Rs2.725 trillion during this period against the target of Rs3.209 trillion.
Cement sector posts phenomenal growth of 33.9pc in February
Cement sector continued to post growth as its total dispatches increased to 4.489 million tons in February 2020 as against 3.352 million tons during the same month last year, showing phenomenal increase of 33.91 percent. Domestic consumption increased by 31.35 percent to 3.736 million tons in February 2020 from 2.843 million tons in February 2019 while exports registered an impressive increase of 48.20 percent from 0.508 million tons in February 2019 to 0.753 million tons in February 2020. North based mills dispatched 3.173 million tons locally, which was almost 46 percent higher than the dispatches of 2.175 million tons during the corresponding month of last fiscal. As per recent trends, exports from the North based mills also increased in February 2020 by 23 percent to 0.202 million tons, from 0.165 million tons in February 2019.
Govt must follow global practice in setting up standards: PAMA
It is imperative for Pakistan to adopt WP29 agreement because the local standards without recognizing the international norms/regulations will rollback existing local content level and would make them techno-economically unviable,” said Abdul Waheed, DG Pakistan Automotive Manufacturers Association (PAMA). “Government needs to provide sustainable quality conformance and upgrade PSQCA testing facilities to supplement support to national economy, which to date PSQCA has failed to build,” he said after attending a meeting of Pakistan Standards and Quality Control Authority (PSQCA). Federal Minister for Science and Technology chaired the meeting attended by representatives from the local auto sector.
Asian shares wobbled on Wednesday and bonds held gains, as an emergency rate cut from the U.S. Federal Reserve did little to soothe investor fears over the coronavirus’s widening fallout.The surprise 50 basis point cut came with commentary highlighting the limits of monetary policy, and Wall Street indexes fell sharply, gold surged and the dollar sank. The yield on benchmark 10-year U.S. Treasuries, which falls when prices rise, hit a once unimaginable low of 0.9060%. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged 0.2% higher, after easing hopes drove gains on Tuesday. Australia's S&P/ASX 200 index fell 1.2% and Japan's Nikkei .N225 was either side of flat in choppy trade.
The government decision to increase the state’s already large footprints in the country’s heavily controlled wheat market through its enhanced purchases of 8.25 million tonnes of staple grain from growers this year will significantly increase its subsidy burden. The targeted procurement is over 30 per cent of the total projected wheat harvest of 27m tonnes this year and more than 60pc of the crop surplus that will be brought to the market. With the support price increased from Rs32,500/tonne to Rs34,125/tonne for the fresh harvest commencing in Sindh from this month and in Punjab from April, the decision means that the federal government and provinces will acquire new loans of Rs281.5 billion from the banks at commercial interest rates to finance their purchases.
The Federal Board of Revenue (FBR) would have to collect Rs2.5 trillion in just four months to achieve the annual revised tax collection target during ongoing fiscal year, which seems challenging. The FBR is struggling to meet the revised tax collection target of Rs5.27 trillion during current financial year. Earlier, the target was downward revised to Rs5.55 trillion after FBR was continuously failing to achieve the monthly tax collection targets. The FBR had so far faced massive shortfall of Rs484 billion in eight months (July to February) of the year 2019-20. According to provisional figures, the FBR has collected Rs2.725 trillion during this period against the target of Rs3.209 trillion.
Cement sector continued to post growth as its total dispatches increased to 4.489 million tons in February 2020 as against 3.352 million tons during the same month last year, showing phenomenal increase of 33.91 percent. Domestic consumption increased by 31.35 percent to 3.736 million tons in February 2020 from 2.843 million tons in February 2019 while exports registered an impressive increase of 48.20 percent from 0.508 million tons in February 2019 to 0.753 million tons in February 2020. North based mills dispatched 3.173 million tons locally, which was almost 46 percent higher than the dispatches of 2.175 million tons during the corresponding month of last fiscal. As per recent trends, exports from the North based mills also increased in February 2020 by 23 percent to 0.202 million tons, from 0.165 million tons in February 2019.
It is imperative for Pakistan to adopt WP29 agreement because the local standards without recognizing the international norms/regulations will rollback existing local content level and would make them techno-economically unviable,” said Abdul Waheed, DG Pakistan Automotive Manufacturers Association (PAMA). “Government needs to provide sustainable quality conformance and upgrade PSQCA testing facilities to supplement support to national economy, which to date PSQCA has failed to build,” he said after attending a meeting of Pakistan Standards and Quality Control Authority (PSQCA). Federal Minister for Science and Technology chaired the meeting attended by representatives from the local auto sector.
Market is expected to remain volatile during current trading session.
Technical Analysis
The Benchmark KSE100 index had succeeded in finding support at 37,000 points for a short term basis after generating an evening shooting star on monthly chart. As of now it's expected that index would try to take an intraday spike to retest its resistant region which fall on supportive trend line of its descending wedge. Initially index seems to target 39,700 points where it would face major resistant but breakout above that region would call for 40,000 points and 40,200 points. It's recommended to trade with strict stop loss and swing trading could be beneficial between 37,000 points and 40,200 points. Overall momentum would remain bearish and index would continue its bearish journey after a small correction therefore it's recommended to avoid initiating long positions for longer run.
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