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Pakistan Stock Exchange's Index Analysis (PSX)
- 2. 2 Submitted To: Sir Sajid Submitted By: Syeda Tayba Bano Submission Date: June 10, 2020 Topic: Index Analysis
- 3. “Measures Change” A stock market index is a measure component of a stock market that helps investors to compare current price levels with past prices to calculate market performance. What is INDEX? 3
- 4. KSE-100 index is a measurement of the value of 100 selected stocks listed on the Karachi Stock Exchange. For Example 4
- 5. The Pakistan stock market index is significantly affects by : • Fiscal policy • Inflation • Financial Position PSX Index Cont.…. 5
- 6. Variables Relationship Index & interest rate Negative Index & government revenue Negative Index & government expenditures Positive Index & inflation Positive PSX Index Relationship 6
- 7. 1. Gives a general sense of the health of the overall stock market. 2. Trace lesser-known indexes. 3. Summarize the performance of the overall market 4. Open up simple investment opportunities. Importance of Index 7
- 9. a) KSE 100 b) KSE 30 c) All Share Index d) NITPG Index e) UPPS Index 1. Equity Index 9
- 10. a) KMI 30 Index (Meezan Index) b) PSX KMI All Shares Index 2. Islamic Index 3. Sectoral Index a) Oil and Gas Tradable Sector Index (OGTI) b) Banking Sector Tradable Index (BKTI) 10
- 11. Calculation of Index • Day 1 Stock Price No of Share Market Value A 10 50,000 5,00,000 B 20 1,00,000 20,00,000 C 30 1,50,000 45,00,000 Total Price 60 Total Market Capitalization 70,00,000 11
- 12. Calculation of Index • Day 2 Stock Price No of Share Market Value A 11 50,000 5,50,000 B 22 1,00,000 22,00,000 C 33 1,50,000 49,50,000 Total Price 66 Total Market Capitalization 77,00,000 12
- 13. The total price is PKR. 66 on Day 2. Comparing it to the total price with the Day 1, (66 ÷ 60 = 1.1) there is an increase of approximately 1.1. In index terms, the Index is increased by ([1.1- 1]/1) = 0.1 points. In percentage terms = (0.1 x 100 = 10%) 10% Price Weighted Index 13
- 14. First, we find Change in Index from Day 1 to Day 2 = (Day2 – Day1) ÷ Day1 = (77, 00,000 – 70, 00,000) ÷ 70, 00,000 = 0.1 = 0.1 x 1000* = 100 This index increase by 100 points i.e. 10% of base Value. * The KSE 100 has a base value of “1000” Value Weighted Index 14
- 15. Starting Price Ending Price Stock A 25000 (25000+250) = 25250 Stock B 250 (250+10) = 260 Understanding of Index Stock A = (25250 – 25000) ÷ 25000 = 0.01 or 10% Stock B = (260 – 250) ÷ 250 = 0.04 or 40% Since we conclude that, the increment in Stock B is much better as compared to Stock A. 15
- 16. Practical Analysis of Index KSE100 Index June 05,2020 KSE 100 index is increase by 0.68% Market Activity Current Index 34,350.42 Change 231.03 Percent Change 0.68% Previous Close 34,119.39 = (34,350.42 - 34,119.39) ÷ 34,119.39 = 0.00677 or 0.677% 16
- 17. Practical Analysis of Index BKTI Index June 05,2020 BKTI index is decreased by -0.29% Market Activity Current Index 10,340.50 Change -29.88 Percent Change -0.29% Previous Close 10,370.38 (10,340.50 - 10,370.38) ÷ 10,370.38 = -0.0029 or -0.29% 17
- 18. Summary of Market IndexJune 01, 2020 June 02, 2020 June 03, 2020 June 04, 2020 June 05, 2020 KSE 100 Index 0.67% 1.13% -0.019% -0.819% 0.677% KSE 30 Index 0.733% 1.45% 0.0103% -1.04% 0.573% KSE All Share Index 0.127% 0.82% 0.0357% -0.8411% 0.59% KMI 30 Index 0.105% 0.136% -0.12% -1.06% 0.967% 18
- 19. 1. Investor gets the idea about current day’s performance. 2. Investor and individuals can relate and compare each day’s performance easily. 3. Investor can easily understand the situation of entire market instead of checking each company’s performance. Reasons of Calculate % Change 19
- 20. Graph KSE 100 June 2019 to May 2020 20 KSE 30KSE 100 KSE All Share KMI Index
- 21. The conclusion of the above graphs is, all Indexes were in a better position before the corona but the country had faced negative results from all sectors due to this pandemic. Now all sectors are trying to get their positions back and we can see in these graphs as all indexes cover their negative points. Explanation 21
- 22. Index is the prime indicator to shows changes in stock market. It is very difficult to check all companies position one by one, Index solve this situation by measuring their values in a simple way and Investors can easily compare the return and position of particular investments. Conclusion 22
- 23. 23
Editor's Notes
- The Pakistan stock market index is significantly affects by the fiscal policy, monetary policy and inflation. According to one study, the interest rate and government revenue has negative relationship with stock market index in Pakistan, while government expenditures and inflation has positive relationship. The reason of negative relationship between government revenues and index is, for increase the ratio of revenues, Government impose different taxes like sales tax, increase the tax rate of banking sector, Capital Gain tax on stock i.e. investor feels uncomfortable in investments. Interest and Government revenues have direct relationship. The increment in government revenues being the reason of increment in interest rate that’s the reason of declining investment ratio.
- KSE 100: It indicates the largest companies based on highest market capitalization. The KSE 100 is designed to provide investors with a sense of how the Pakistan equity market is performing. It represents all the market sectors of PSX with 80% to 85% of all the market capitalization of the Exchange. KSE 30: The top 30 liquid companies listed on PSX All Share Index: It contains all listed companies on PSX based on Full Cap methodology NITPG Index: The index aims to track the performance of stocks that represent top 50% free float market capitalization of KSE-100 index. UPPS Index: The Index aims to track the performance of top nine companies with highest free float market capitalization of KSE-100 index (excluding Oil and Gas sector companies)
- KMI 30 Index: KMI 30 Index tracks the 30 liquid Sharia compliant companies listed at PSX. PSX KMI All Shares Index : All Sharia compliant companies listed on the PSX. OGTI: The Tradable Oil & Gas Index tracks at least 80% free-float market capitalization of the Oil & Gas Sector. BKTI: The Tradable Banks Index is based on the listed companies in the banking sector.
- Key Point: The investor should check the reason for increment by verifying book value through financial reports and the company’s portfolio. He must find the reasons for this positive increment and ensure that the company is not involved in gambling or illegal activities when he is ready to invest in a particular company. Because in the past, few companies involved in illegal activities, and they successfully increase their shares prices by unethical activities.
- This table shows the 5 days results. The KSE 100, on June 1, 2020 increased by 0.67% from its previous value, on June 2, 2020 increased by 1.13%, while on June 3, 2020 decreased by 0.019%, on June 4, 2020 decreased by 0.819%, and on June 5, 2020 KSE 100 overcome its downfalls and increased by 0.677%. The KSE 30, on June 1, 2020 increased by 0.73% from its previous value, on June 2, 2020 increased by 1.45%, while on June 3, 2020 decreased by 0.013%, on June 4, 2020 decreased by 1.04%, and on June 5, 2020 KSE 30 overcome its downfalls and increased by 0.573%. The KSE All Shares, on June 1, 2020 increased by 0.127% from its previous value, on June 2, 2020 increased by 0.82%, on June 3, 2020 increase by 0.035%, while on June 4, 2020 decreased by 0.84111%, and on June 5, 2020 KSE All Share overcome its downfalls and increased by 0.59%. The KMI 30, on June 1, 2020 increased by 0.105% from its previous value, on June 2, 2020 increased by 1.36%, while on June 3, 2020 decreased by 0.012%, on June 4, 2020 decreased by 1.06%, and on June 5, 2020 KSE 30 overcome its downfalls and increased by 0.967%.
- At the beginning of this year, the KSE 100 index rose with good points and even it went to above 42000 but it declines slowly and during march, the KSE 100 goes down due to CORONA because at that time market condition was not well but index cover this downfall and now it increases its points as KSE 100 has above 34000. KSE 30’s, 2020’s starting condition is quite well but after 3 months Its points went down, stuck on 12, 00 K, and after 1 month gradually increases and now the points are above 1500 k. KSE All Share index was at better position as shown in this graph that starting point is at top side but in March, it starts going down. In May, it moves to better position and cross 2400K points that’s the good sign. KMI had have a better position at the start of this year but after March it gradually declined and in the mid of April it crossed cross 450000, and in May it stabilizes its position by crossing 50000.