Weekly review: KSE-100 falls 271 points during volatile week

Banking sector led the decline; oil and gas sector recovered on attractive valuation

KARACHI:

High volatility persisted at the stock market with the benchmark KSE-100 index swinging wildly before settling with a 271-point (0.8%) decline during the week ended December 18.

Investors held their breath ahead of the US Federal Reserve’s rate hike announcement on Wednesday and kept the market under pressure in the opening days. The banking sector came under pressure during the week while the oil and gas sector posted surprising gains despite falling crude oil prices.

The week started off on a negative note with the market reacting to the sharp decline in crude oil prices at the end of the previous week. Similar pressure was witnessed on Tuesday as investors offloaded their holdings ahead of the Fed announcement. The KSE-100 index fell 581 points in the opening two days.

The market rebounded as the oil and gas sector recovered on Pakistan Petroleum’s significant gas discovery and the Fed finally announcing the rate hike with a clear direction for the future. The index rose 640 points before falling 331 to end the week at 32,777 on Friday.

Much of the week was dictated by the US Federal Reserve’s policy announcement which was due on December 16. The Fed finally decided to raise the interest rate by 25 basis points to 0.5% and announced plans to raise the rate to 2.4% by the end of 2017. Although the market was negative in the run up to the announcement, it turned positive after the announcement as the Fed outlined a clear direction for future rate hikes.

The banking sector was the major underperformer and dragged the KSE-100 index lower by 182 points during the week. News of the National Bank of Pakistan writing off Rs12 billion worth of bad loans and Habib Bank Limited coming under scrutiny by US regulators were the major causes of the steep decline.

The oil and gas sector was a surprise strong performer for the week with Pakistan Petroleum Limited leading the way after announcing a large discovery of gas in Sindh. The gains were surprising because the price of crude oil continued to plummet and fell below $35 per barrel at the end of the week.

Foreigners continued to be net sellers at the bourse, offloading a net of $10.3 million worth of equity during the week, matching the $10.2 million net selling in the previous week.

On the macro front, the country’s foreign exchange reserves rose to $20.7 billion, while the latest FDI figures revealed an 8.7% jump in the first five months of the fiscal year, primarily due to inflows from China.

Average daily volumes fell sharply by 23.1% and stood at 139.1 million shares traded per day while average daily values declined marginally by 3.2% and were recorded at Rs8.68 billion per day. The Karachi Stock Exchange’s market capitalisation stood at Rs6.89 trillion ($65.7 billion) at the end of the week.

Winners of the week

Pakistan Petroleum



Pakistan Petroleum Limited specialises in the exploration and production of crude oil and natural gas. The company also sells liquefied petroleum gas and condensates.

Archroma Pakistan Ltd



Archroma was formed in September 2013 from the textile, paper and emulsions businesses of Clariant.

Mari Petroleum Company Limited   



 

Mari Petroleum Limited specialises in the drilling, production and selling of natural gas.

Losers of the week

Sui Northern Gas Pipelines



Sui Northern Gas Pipelines Limited purchases, purifies, transmits, distributes and supplies natural gas, in addition to marketing liquefied petroleum gas.

Associated Services Limited



Earlier called Latif Jute Mills Limited, the company is one of the industrial machinery and services firms in Karachi.

TRG Pakistan



TRG Pakistan operates as an information technology company. The company provides business support and software services to companies. TRG Pakistan manages call centres and offices located in Pakistan and elsewhere throughout the world.

Published in The Express Tribune, December 20^th, 2015.

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