Weekly review: KSE-100 Index manages finish over 40,000

Benchmark declines 0.6% as news flow guides sentiment

KARACHI: The stock market was adversely affected by political uncertainty and business-related factors during the outgoing week with the KSE-100 Index declining 238 points to close at 40,010 points.

The government's decision to shut down furnace oil-based power plants significantly dampened investor interest in the oil and gas sector, especially due to the massive losses being suffered by oil companies on account of demurrages due to pre-ordered consignments being kept at sea.

A proposed revision in gas companies' tariff structure by the Oil and Gas Regulatory Authority (Ogra) also kept buyers on the sidelines while propelling selling. Engro's removal from MSCI EM Index to a small caps index also caused a selling spree of the stock, despite a brief recovery later on in the week.

The only positive for the stock market during the week was the government raising $2.5 billion through a sovereign Sukuk and Eurobond issue intended to strengthen the foreign exchange reserves position.

On Monday and Tuesday, the stock market maintained its usual pattern of low turnover and lack of institutional investor interest. A massive reduction in global crude oil prices coupled with political uncertainty emanating from the Faizabad sit-in did not help the cause either.



Attractive valuations of notable index names attracted investor interest on Wednesday with the market making a slight recovery to break a four-day losing streak. The momentum carried forward into Thursday with institutional investors gobbling blue-chip stocks at attractive rates. The government's announcement of raising $2.5 billion from its bond issue also helped in creating a bullish sentiment in the market on the last trading day of the short week.

Trading activity increased significantly by 16% as average daily traded volumes rose to 130 million shares while average daily traded value shot up 63% to $76.3 million.

In terms of sectors, oil and gas exploration companies (-151 points), OMCs (-104 points), cements (-68 points), power generation and distribution (-57 points) and refineries (-27 points) were the major laggards for the week.

Stocks that negatively contributed to the index include PPL (65pts), SNGP (53pts), LUCK (40pts), DAWH (38pts) and HUBC (38pts).

On the flip side, stocks in the green included UBL (86pts), ENGRO (51pts) and PAKT (51pts).



Foreigners remained net sellers of $40 million during the week compared to a net selling of $6 million in the previous week.

Selling was concentrated in fertilisers ($29.5 million), commercial banks ($ 5.5 million) and cements ($3.0 million). On the domestic front, individual and retail investors led the bullish sentiments buying stocks worth $8.6 million followed by insurance companies ($8.5 million) and other companies ($7.3 million).

On Thursday major foreign selling of $19.90 million was witnessed on account of rebalancing in the MSCI Emerging Market index which excluded ENGRO from the mid cap.

Other major news during the week included; Council of Common Interests rejects proposal on sugar export rebate, Nepra slaps Rs5 million fine on NTDC, ECC allows sugar exports of 1.5 million tonnes, domestic borrowing soars to Rs853 billion in July-August and bond auction raises $2.5 billion.