IMS Day Wrap – Volte-face

The 100 index staged a brilliant recovery today particularly when considering yesterday’s mini sell-off and more than compensated for yesterday’s decline to close up 329.78 points (+0.95%) at 34,897.30. Market participation remained broad based with BOP, PTC and OGDC standing out as market leaders for today’s session. Significant gains were seen in energy plays particularly in E&P, Refineries and OMCs. OGDC closed up on its upper circuit limit following a technical break out. Cements managed to shrug off yesterday’s concerns regarding dispatches for April and rallied hard on the back of upcoming MSCI review for Pakistan’s inclusion in emerging markets. Every June, MSCI communicates its conclusions from the discussions with the investment community on the list of countries under review and announces the new list of countries under review for potential market reclassification in the upcoming cycle. Banks were also in demand more so with yesterday’s CPI number clocking in above market consensus at 4.17%.

Towards the end OGDC (77.13 pts), MCB (50.08 pts), HBL (36.27 pts), UBL (30.18 pts) and NESTLE (26.10 pts) stood out as market leaders from performance perspective whereas BOP, BAFL and NATF staged a lagging performance and took away 10 pts from the 100 index. Strengthening yen eventually took its toll on the autos sector as most of the names from auto sector either closed in red or way below their intraday highs while pharmaceuticals rallied on the back of a possible hike in drug prices in coming days. Among fertilizers ENGRO stood out as the top performer for the day.

On the international front, EU Commission cuts euro zone GDP growth forecast in 2016 at 1.6% from a previous forecast of 1.7% growth. The greenback fell to 105.55 yen, its lowest since October 2014, as worries over subdued inflation and tardy global growth returned and pushed investors to the safety of low-yielding, relatively more liquid currencies. Crude oil remained volatile as rising output from the Middle East and North Sea renewed concerns about a global supply overhang.

Technically speaking, with the 100 index closing just shy of its resistance at 34,900 we believe a move past 35k is very much in order.