IMS Day Wrap – Mother of all resistance 34k

An interesting day with a better mix of interest in multiple sectors, as sizable volume was traded across the board. Some say it was a welcome call after yesterday’s SECP/brokers interactive meeting which ended on a positive note as everyone agreed to work together to enhance market liquidity and follow best international practices as we head for a possible upgrade to MSCI EM from FM.

The 100 index started the day on a bullish note, witnessing an out-performance by E&P sector initially, especially by the big boys OGDC & PPL, making an intraday high of PKR 124.70 & 146.84 respectively. The 100 index during the first half rallied beyond 34k, clocking in an intraday high of 34,027.62, but the sentiment changed when OGDC announced its earnings posting an EPS of PKR 2.16 for the 3QFY16 which was way below market expectation. SNGP was the volume leader for the day clocking in a turnover of 26.4mn shares as the OGRA has given a go ahead to SNGP to collect PKR 43bn for LNG pipeline projects. Cements came back in the lime light after being out of sight for a while and bounced back with decent volume in the mainstream stocks.

Major contribution to upside came from LUCK, FML, PKGS, OGDC, HBL and UBL adding 100 points cumulatively to the 100 index. While on the flip side FFC, PSO and KEL brought the index down by 34 points. Towards the end the 100 index despite witnessing a brilliant start closed on a reactive note retracing by approximately 50% from its intra-day high to close at 33,847.74 – up 163.18 points or 0.48%.

Earnings season was in full swing today as UBL came out of its closet & posted consolidated NPAT of PkR7.51bn (EPS: PkR6.14) in 1QCY16, followed by ABL which recorded NPAT of PkR4.82bn (EPS: PkR4.21) in 1QCY16, FFC announced unconsolidated 1QCY16 NPAT of PkR2,728mn (EPS: PkR2.14), translating into 54%YoY decline in earnings and MLCF announced earnings of PKR3.5bn (EPS: PKR6.7) in 9MFY16 compared to PKR2.3bn (EPS: PKR4.5) in 9MFY15.

Technically speaking, the 100 index staged an intraday breakout from the pennant formation but failed to close above the trend line resistance. We now look for a closing above 34,155 for a sustainable rally.