PakStox Outlook

  43,030  -777 (-1.8%) No it was not as bad as it looks. Normally such a decline would have been associated with major selling of Mutual Funds or 'foreigners'. But  no such thing took place. 'Foreigners' are almost done with their selling at PSX on account of exclusion of Pakistan from MSCI EM Index. And Mutual Funds lately do not appear to be facing much redemption pressure. So this drop of ominous looking number is primarily because of absence of buying interest in view of next week being roll-over week and also general trend being weak However, there was some more than usual selling by 'foreigners' in the banking sector. For the last few trading sessions I am noticing some selling pressure in 'Banks' from foreigners after the FATF meeting. Also the fact that the 'banking' sector has been performing better on account of better earning and yield - so that's where liquidity is and buying, hence 'foreigners' were able to executive some...

KSE100 Index closed in red with a very low level of activity. 43,807  -168 (-0.38%) PSX started with a positive tone and KSE100 Index did reach a high of 44187, but in absence of any positive development on economic, or political level the market continued to lose ground throughout the day.  Next week being roll-over week is also a consideration for active market participants to remain on sidelines this week. It is a good thing there is no selling pressure in the market.  Cement sector did see some positive interest as cement prices at retail level have increased because of cost pressure. In overall terms activity remained subdued though.  Oil prices (Brent) again spiked above $100 (now trading at $105) after news that diplomacy is not making much headway between Ukraine and Russia. Fed increased its benchmark rates yesterday, that too has not dented speculative activity in the commodities market. Trading would be curtailed by one day next week due to the 23rd March ...

The Fed raised it benchmark fund rate to a target range of 0.25% to 0.5%, ending the covid era of almost free money. This will have a direct impact on mortgages (although still very low) car loans and credit card payments for US consumers.  first rate increase after 2018 DJI rose 1.55%, to above 34k level, S&P rose 2.24%, and the Nasdaq Composite added 488 points, rising by 3.77%. Markets were already in good mood over diplomatic developments on the Ukraine issue, and China’s promise to roll out more stimulus for the economy and keep markets stable added to the positive outlook Fed announced a raise in the target range for the federal funds rate to 0.2 5 to 0.5%, as was widely expected. But  indication that benchmark rate could reach a level between 1.75% to 2% was considered more hawkish by some. The Fed had termed inflation as transitory about a year ago. Data released last week shows US inflation at 40 years high. The   30 year fixed rate mortgage had...

In addition to generating intense speculative activity in Oil and other commodities , the Ukraine crisis has set the ball rolling on several fronts internationally. The crisis has put in sharp focus Europe critical dependence on Russia for its Oil and Gas. This crisis also created an urgency with respect to Iran negotiations with the US for lifting of sanctions so that additional Iran oil may calm markets. The sweeping sanctions on Russia has made other countries not in western block weary of US unilateral actions and intolerance for any quarter harbouring even slightly different notions. This must be creating ripples in circles responsible for strategic planning and future policy. This crisis will change landscape not only of Europe but also of world economic affairs. Every use of a force or even threat of use of that force changes the way in which that force may again be used in future. As if every ‘force’ or ‘action’ has a set number of ‘lives’. This Ukraine conflict will allow coun...

KSE 100 index posted another gain today. It increased by 256 points (+0.6%) today,  closing at just 25points  shy of 44k level. Market had moved strongly since morning and gained over 500 points before correcting a bit. The move is notable for the fact that roll over is next week. Market is primarily reacting to oversold state and absence of any selling pressure. There was high participation in the PIB auction today. Raised amount of Rs 192bn against target of Rs 100bn.  Yields increased +88pbs to 115bps, reflecting higher yield in TBill auction this week. The 3 years cut off yield was 11.85%. There are healthy signs that the money market may be expecting inflation coming down from recent highs. This depends primarily on oil prices going forward. Rupee continues to be weak. Today it reached an all time high of 179.44 rupee to a US dollar. Rupee has declined more than 12% in this financial year. Oil trading downwards. Brent around $98. Experts expect that in case of some d...

Brent traded below $100 after heightened diplomatic efforts to reach and early end to Ukraine crisis. Gold also trading at $1926 after having seen high of $2069 last week. Worst fears on Ukraine issue have subsided for the time being. Renewed Covid fears in China is also affecting Oil prices. PSX in green today as worst fears related to Ukraine of National politics gave way to hope. KSE100 Index gained today 353 points (+0.81%) closing at 43,720. Traded value also increased by 30% over yesterday's low. Trading pattern confirms absence of any selling pressure. I expect that market gains would be substantial once there is more clarity on commodities prices, Ukraine situation and on national front. Market participants have shown that they are ready to respond to even slightest of positive tone on these fronts. Rupee remains under pressure aiming for 180 for a dollar. IMF talks latest round remaining inconclusive. This is our chronic issue made worst because of Afghanistan. Any break...

PSX remained weary of political scene today with low level of trading activity. KSE100 traded today within a range of +114 and -328 finally closing at 286 points (-0.66%) at  43,367.  Despite negative closing, PSX is not under any selling pressure. Mutual Funds were net buyers today. 'Foreigners' were also net buyer today. In general things appear stable.  Steel and Cement prices have been increased to pass on cost increase. In general construction activity in the country is immense at the moment. Substantial capacity utilization in these industries with demand stemming from primarily small consumers base is a good sign.  Pakistan is facing pressure on public finances and exchange reserves a prices of commodities especially Oil remains at elevated level despite some decline last week. Global increase in commodity prices will further add to inflation at home. This creates a difficult situation for Pakistan economic managers. Recently announced relief package that red...