IMS Day Wrap – Typical Monday Blues

Today we witnessed a typical Monday Blues syndrome where majority of the Asian markets were spared on account of Labor Day holiday whereas those which were open got deceived by the Japanese yen which traded near its strongest level in 18 months. Oil declined which added further pressure to a selloff in Asian equities. Meanwhile, European equities remained little changed during the session after Markit said that Euro-area manufacturing grew at anemic pace last month. Towards the end the 100 index closed down 151.77 points (-0.44%) at 34,567.52. Trading activity remained thin witnessing a day over day decline of 34% meanwhile extensive turnover in BOP, SNGP and TRG contributed towards 44% of the total 100 index turnover.

Major contribution to downside came from energy plays which came under significant selling pressure following a profit taking spree in E&P, Refineries and OMCs. Cements also came under selling pressure after reports of cement dispatches clocking in at 3.5mn tons (-3% MoM) during the month of April came out in the street. Thanks to heavy rainfall in some parts of Punjab region which affected sales on monthly basis in Apr 2016. Fertilizers remained under selling pressure despite reduction in feedstock gas prices to the tune of PKR 76.59/mmbtu. Consumer staples like NESTLE, JDWS, NATF and EFOODS also added to the downward pressure during the session. Banks started the session on a bullish note but eventually caved into selling pressure towards the end.

Retail favorite TRG witnessed its biggest rally in 9 sessions after consolidating below its 61.8% retracement level and added 10 pts to the 100 index today. In a statement issued through Bloomberg, HUBC disclosed that it has applied for 330MW coal fired power plant at Thar block II which helped the power producer close up 0.34% towards the end. Selected pharmaceutical names also staged a comeback on the back of news flow that DRAP will discuss and may approve hardship cases of almost 358 medicines in a meeting which is scheduled to be held on May 4 and 5, 2016.

Technically speaking, the 100 index has started gearing up for its next move while consolidating below its immediate resistance at 34,900 (76.4% retracement at 34,893/ Sept 01, 2015 high 34,912).