PSX Daily Market Review - 7th May 2018

Trading volume at PSX floor dropped by 4.56 million shares or 3.16% on DoD basis during last trading session, whereas the benchmark KSE100 Index opened at 44,750.79, posted a day high of 44,785.32 and a day low of 44,467.44 during last trading session. The session suspended at 44,536.91 with net change of –209.72 and net trading volume of 68.78 million shares. Daily trading volume of KSE100 listed companies dropped by 4.97 million shares or 6.74% on DoD basis.
Foreign Investors remained in net buying position of 1.93 million shares but net value of Foreign Inflow dropped by 1.29 million US Dollars. Categorically, Foreign Individuals and Overseas Pakistanis remained in net buying positions of 0.095 and 3.17 million shares but Foreign Corporate Investors remained in net selling positions of 1.33 million shares. While on the other side Local Individuals, Banks, NBFCs and Insurance Companies remained in net selling positions of 2.19, 1.98, 0.09 and 0.98 million shares but Local Companies, Mutual Funds and Brokers remained in net buying positions of 0.4, 0.02 and 1.88 million shares respectively.

Asia shares lag Wall Street amid dollar strength
Asian shares crept higher on Monday after a tame reading on U.S. wages lessened the risk of faster rate hikes by the Federal Reserve, although Sino-U.S. trade tensions and a looming deadline for the Iranian nuclear deal argued for caution. The week ahead also has important readings on the health of the Chinese economy, and hence global demand, as well as the latest data on U.S. consumer price inflation. The early action was limited with MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up 0.2 percent. Japan's Nikkei .N225 was flat, while Australian stocks added 0.3 percent. E-Mini futures for the S&P 500 .ESc1 also inched up 0.2 percent. Friday’s U.S. jobs report showed unemployment dropping to a new cycle low of 3.9 percent yet wages remained benign, suggesting the Federal Reserve would keep raising rates but at a gradual pace.
Bank deposits fall by 0.86pc
According to the weekly statement of position of all scheduled banks for the week ended April 20, 2018 deposits and other accounts of all scheduled banks stood at Rs12,186.973 billion after a 0.86 per cent decrease over the preceding week’s figure of Rs12,292.919bn. Compared with last year’s corresponding figure of Rs11,013.880bn, the current week’s figure was higher by 10.65pc. Deposits and other accounts of all commercial banks stood at Rs12,116.703bn against preceding week’s deposits of Rs12,221.717bn, showing a decline of 0.86pc. Deposits and other accounts of specialised banks stood at Rs70.269bn, lower by 1.31pc against previous week’s figure of Rs71.202bn.
Options to deal with the external front crisis
PAKISTAN secured a $1 billion commercial loan from a Chinese bank a day after the announcement of the federal budget 2018-19 on April 27 which is repayable in three years. This improved its total foreign exchange reserves to $17.7bn, jacking up official reserves held by the State Bank of Pakistan by 5.5 per cent to $11.5bn. Based on past experience, many analysts believe another programme from the International Monetary Fund was inevitable and perhaps around the corner given the political transition involving three governments changing hands in less than four months. The government has already revised its estimates for external resources to almost $12bn from original budget estimates of around $8bn, more than doubling commercial loans to almost $7.2bn from around $3bn for the current fiscal year.
OGDCL adds 17 oil, gas wells to system
Oil and Gas Development Company (OGDCL) has injected 17 new oil and gas wells, producing 359,267 barrels crude oil and 9,624 mmcf gas, in its production gathering system during three quarters of the current fiscal year. Injected wells include Pakhro-1, Chanda-4, Dachrapur-3, Kunnar South-1, Tando Allah Yar-1, Chandio-1, Moolan-1, Resham-1, Nandpur-10, Pasakhi North-3, Khamiso-1, Daru-1, Kunnar Deep-10, Qadirpur-25A & 58, Qadirpur-HRL 12 & 14, official sources told APP. During the period under review, they said, the company made four oil and gas discoveries, having expected cumulative daily production of 47 mmcf gas and 749 barrels oil.
Rupee trades flat against dollar
The local currency market witnessed dull trading activity last week while the rupee/dollar parity showed a steady trend. Trading was seen normalising. On the interbank market, the rupee traded firm against the dollar. The parity was steady after commencing the week flat at Rs115.61 and Rs115.62. Retaining overnight rate in all the four trading sessions, the rupee closed the week unchanged at Rs115.61 and Rs115.62 against the dollar amid normal dollar demand from importers. There was no pressure on the rupee as dollar supplies were sufficient to meet dollar demand from importers.

The Benchmark KSE100 Index had found support at a descending trend line along with a horizontal supportive region after closing below its major supportive region of 44,860 points on daily and weekly chart. As of now index would try to bounce back for an intraday spike during current trading session but momentum would remain negative and bears would try to add pressure, it’s expected that index may open with a negative gap below 44,500 and then start an intraday spike. Closing below 44,500 points on daily chart would call for a straight 1,000 points drop from current level and index would find ground at 43,400 points. Weekly and Daily Stochastic and MAORSI are in negative mode but on hourly chart they are trying to generate bullish crossovers for an intraday pull back towards 44,860 and 45,136 points where index would face strong resistances. For current trading session it’s recommended to adopt swing trading strategy with strict stop loss on both sides.