Where now for PSX?

Judgment has now been reserved in the Panama case. The KSE-100 index has slid 7 percent since the Supreme Court order on April 20, 2017. It has also seen a recovery of sorts of 2.5 percent in five trading sessions, ever since the JIT report was submitted to the apex court. Now that the proceedings are over and the final verdict could be announced any day, all eyes are on where the KSE100 index goes from here.

From the start of the year till April 20, 2017, the intraday movement of KSE-100 index averaged 500 points or roughly 1 percent. Ever since, it has almost doubled to 960 points or 2 percent. Market players have put it down to the lingering of the Panama case, as the market was struggling to find any sense of direction.

Now that the verdict will come sooner than later, the market should be ready to take off again, if the market’s collective sense is anything to go by. Most market players had opined that once the case is over, no matter what the decision is, it should end the anxiety, and the market should head north, preferably with much higher volumes (Read: PSX searching for certainty’ published on April 13, 2017).

The nervousness could be gauged more from the visible dip in trading activity, than the index points. The average daily volume at KSE-100 index has decreased by 33 percent since the submission of JIT report on April 10, 2017, compared to average volume since the April 20 judgment. The average 100 index volume has shown symmetry to the 10 day period leading to the April 20 verdict, where it had averaged 65 million shares traded per day. Volume in the last seven trading sessions has also averaged 65 million shares.

This time around though, expect the jitters to continue for longer, as the date of verdict announcement has not been made known yet. There are contrasting views in the market as regards the direction the index would take post the final verdict. Some still believe that the panic value in a scenario that results in PM’s disqualification is still 10-12 percent on the downside. Should the PM escape disqualification, there is a near consensus that the market could go up by the same quantum in a jiffy.

All this while, expect the volumes to stay dry.