The third week of January was a volatile one for the investors at the Pakistan Stock Exchange with wild swings from the onset. The benchmark KSE-100 index, however, closed the week in positive territory with a return of 0.3 percent.
At the end of the second week, the index had closed into negatively with a sharp sell-off. Right after the close, the SECP issued directives to mutual funds to not be fully invested in the equity market and to maintain 5 percent cash balance. Over the weekend the rumour-mill took over and various estimates of mutual funds excess investment percentages started flowing around. In reality only a couple of mutual funds were over the limit but the fear had set in.
On Monday, the market opened upwards but soon went into negative territory on low volume. Soon, the fear element took over, and the index came down 485 points from its peak. Whispers of correction turned into loud calls. Panama-gate added fuel to fire and investors came selling again on Tuesday as the index dropped 700 points intraday again on low volume. As it has been the case during this bull market, the bottom-fishers took advantage of the situation and started to buy. After a fierce battle between bulls and bears, the index almost recovered hinting towards a reversal.
On Wednesday, the market opened as if nothing had happened past few days. Steel stocks such as International Steels (PSX: ISL), International Industries (PSX: INIL) and Aisha Steel (PSX: ASL) opened at their upper circuit breakers with huge bids. The National Tariff Commission in their decision had imposed 19 percent anti-dumping on CR coil and sheets that were being exported by mills in China and Ukraine for the next five years. These steel stocks maintained their upper circuits till the end of the week. Protection from imports for five would bring windfalls for these steel companies. The cement industry is a prime example of this type of protection.
News of 5 percent stake sale by the government in (PSX: OGDC) did not fare well for the stock this week. The stock went down more than 10 percent as investors believed that the stake sale would be around 150 level while the stock was trading around 165 level. On the other hand, when Continental Global Holdings (Netherlands) came to sell their 9.8 percent stake in General Tyre (PSX: GTYR) during the week, individual investors took the selling head-on and absorbed it completely. The stock went up 10 percent after that. Apparently local investors see more value in the company than the previous foreign strategic investor.
The week ended on a high note as the market recovered completely. The finance minister also visited the exchange to formally sign the PSX stake sale deal with the Chinese. Technically speaking, a major impetus would be required to break the 49,800 level, which was also the previous high. Sideways movement can be expected during the next week.
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