The 100 Index lived through another volatile session, initially witnessing a rally driven by news flow that in a bid to revive investor confidence the government is mulling over reducing advance income tax and capital gains tax on the sale and purchase of shares. Moreover, recovery from yesterday’s low got extended early on, driven by inertia from the previous session, however concerns on economy came to the forefront as investors opted to sell the rally. After touching its intraday high (37,339) the 100 Index slipped throughout the day while shedding -848pts from its intraday high. For the most part, market chatter of possible exclusion of Pakistan from MSCI EM Index was brushed aside by market participants yet LUCK (-3.33%) closed under duress amid speculation on its fate in MSCI EM Index. Market activity took a step back on d/d basis (vol -12.7% and val -15.31%) amid concerns on sustainability of today’s run-up. Materials (32.63% of total turnover) traded the most amid heavy activity in DGKC (6.28% of total turnover) and ISL (5.15% of total turnover). Energy (24.20% of total turnover) was next in line with PPL (5.44% of total turnover) and ATRL (5.02% of total turnover) in the limelight. Financials (15.37% of total turnover) were next in line with UBL (3.83% of total turnover) and HBL (3.49% of total turnover) standing out amid heavy selling in today’s session. The day ended with the 100 Index losing -104.19pts (-0.28%) to close at 36,663.38.

Major drag to the 100 Index came from Industrials (-2.64%), Health Care (-1.63%), Materials (-1.28%) and Utilities (-1.00%) amid heavy selling in TRG (-5%), MTL (-1.99%), PAEL (-4.23%), SEARL (-4.82%), SHFA (-3.80%), FFC (-2.97%), LUCK (-3.33%) and ENGRO (-1.25%). On the flip side, Energy (+1.35%) kept market bears in check amid positive contribution from PPL (2.20%), POL (+2.99%), OGDC (+0.86%) and ATRL (+4.44%). In related news, CHCC announced 1QFY19 NPAT of PKR 431mn (EPS: PKR 2.44), down 29% yoy. While the result was above our expected NPAT of PKR 349mn (thanks to deferred tax reversal of PKR 133m), on PBT basis the profits declined by 58% YoY with GMs clocking in at 16.5% vs. our expectation of 19.0%. Similarly, ISL posted 1QFY19 NPAT of PKR 841mn (EPS: PKR 1.93), down 16% YoY/26% QoQ, against our expected NPAT of PKR 926mn (EPS: PKR 2.13). Deviation majorly resulted from lower than expected sales, likely on account of slow economic activity during the quarter. Lastly, Mr. Ruhail Mohammed has opted for an early retirement and has tendered his resignation as CEO of EFERT.

Market participation for the 100 Index declined to 92.12mn shares from 105.52mn in the previous session (-12.70% on d/d basis). Major contribution to total market volume came from WTL (-4.38%), BOP (+5.81%) and TRG (-5%) churning 58.65mn shares out of the All Share volume of 181.73mn shares. Daily traded value for the 100 Index declined to USD 33.03mn from USD 39.00mn in the previous session (-15.31% on d/d basis); DGKC (USD 2.11mn), PPL (USD 1.83mn) and ISL (USD 1.73mn) were among top contributors from traded value perspective. Major contribution to the 100 Index downside came from UBL (-2.81%), FFC (-2.97%), LUCK (-3.33%), HBL (-1.68%) and ENGRO (-1.25%) taking away 173pts. On the flip side, PPL (+2.20%), POL (+2.99%) and BAHL (+2.75%) added 120pts. The 100 index is 1.1% above its 52-week low of 36,274.25 reached on October 15, 2018 and 22% below its 52-week high of 47,144.12 reached on April 6, 2018.

Technically speaking, the 100 Index staged a reactive close from day high and formed a candle with an unusually long upper shadow (shadow of doubt). It is considered a weak bearish pattern and takes on greater significance when the market is over-bought or at resistance. With the 100 Index struggling at falling trend line support we expect current levels to play a pivotal role in limiting further losses. Courtesy – IMS Research