PM no more Sharif, but stock market recovers

After plunge of 3.6%, KSE-100 Index recovered in dramatic fashion to end marginally positive

KARACHI: Much like the rest of the country, stock market participants were keenly awaiting the Panama case verdict.

Hence, it was little surprise that the KSE-100 Index - a benchmark for market performance - reacted the way it did. A plunge of 2.5% in the morning was a reaction to the announcement that the Supreme Court would deliver its verdict in the Panama case on Friday. It was followed by an even further decline once Prime Minister Nawaz Sharif was dealt the disqualification blow.



Overall, the KSE-100 Index hit an intra-day low of 44,235.94 -- a decline of close to 3.6% -- but it didn’t end there. Attractive valuations meant investors were keen to buy. But why would you knowing full well that the federal cabinet is now dissolved, that the tradition of not even a single prime minister completing his five-year term in office is kept alive, and that the future of the ruling party is now uncertain -at least on paper.



But stock market participants did not think that far. They saw a plunge of 3.6% and an opportunity to buy, especially a golden one since uncertainty over Nawaz Sharif’s official political future was now over.

A complete u-turn in share prices meant the KSE-100 Index recovered all its losses and even landed in the positive for a good part in the last 10 to 15 minutes. The 30-minute average meant it ended almost flat, but the direction was clear - the worst is now over.

At close on Friday, the KSE-100 Index finished with a gain of 6.27 points, an increase of 0.01% but absent context.

One brokerage house, Elixir Securities, stated it was “an exciting day”.

“The KSE-100 managed a green close after wild swings as the Supreme Court announced the much-awaited verdict on the Panama case and disqualified Prime Minister Nawaz Sharif.

“Following the decision, Nawaz announced stepping down and dissolved the federal cabinet with meetings ongoing to decide on appointing a new Prime Minister.

“After being down 3.6%, value buying in the afternoon session, primarily led in early surge by the locals, helped the wider market completely recover from the knee-jerk dip post the verdict announcement.



“On the leaderboard, Hub Power (+5%) emerged as the top gainer as investors, in a bid to hedge from possible Pak Rupee depreciation in the future, built fresh positions in the stock while notable oil plays also got most attention during recovery due to their dollar-linked revenues.

“We expect investors to closely track developments on domestic politics with reaction from ruling party PML-N providing more clarity and we see value buyers coming out and mainly supporting the market next week.”

Overall, trading volumes rose to 327 million shares compared with Thursday’s tally of 158 million.



Shares of 364 companies were traded. At the end of the day, 218 stocks closed higher, 132 declined while 14 remained unchanged. The value of shares traded during the day was Rs21.1 billion.

Azgard Nine was the volume leader with 24.9 million shares, gaining Rs0.92 to close at Rs14.65. It was followed by Engro Polymer with 19.7 million shares, gaining Rs0.08 to close at Rs37.03 and TRG Pakistan with 18.5 million shares, gaining Rs1.61 to close at Rs41.37.

Foreign institutional investors were net sellers of Rs1.412 billion during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.

Published in The Express Tribune, July 29^th, 2017.

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