Stocks endure rocky week as index finishes up just 24 points

Macroeconomic concerns keep investors jittery as volumes and values decline

KARACHI: The stock market had a volatile week with the benchmark index oscillating between red and green zones amid mixed sentiments. The KSE-100 index finished the week up a meagre 24 points to settle at 38,586.

The week kicked off on a positive note as the prime minister’s assurances to businessmen and Pakistan Stock Exchange (PSX) officials injected life into the equity market, which staged a rally, rising 738 points.

Prime Minister Imran Khan had assured them that steps would be taken to promote and protect investment. Adding to this, the Supreme Court lifted the ban on construction of high-rise buildings, which spurred buying activity in cement and steel stocks.

Sadly, the optimism proved short-lived as the index once again lost ground on Tuesday. Concern over the country’s macroeconomic situation dampened investors’ sentiments, fuelling the bearish trend. The following two sessions also witnessed a dismal performance as the KSE-100 continued to move south. Investors resorted to profit-taking amid deteriorating economic indicators.

Negative comments from Fitch and Moody’s - international credit rating agencies - also caused the loss of momentum. Moreover, news about Pakistan being placed on the blacklist for alleged violations of religious freedom also dented sentiments.



Sui Southern Gas Company (SSGC) also suspended gas supply to captive power plants and the industrial sector which did not help matters.

However, things took a turn for the positive as arrival of the second tranche of $1 billion from Saudi Arabia boosted activity. Resultantly, the market finished its last trading day of the week with a gain of 574 points.

Investor participation fell significantly, with average daily volumes for the outgoing week decreasing 26% to 121 million shares, while average daily traded value fell 31% to $40 million.

In terms of sectors, positive contribution to the index was led by oil and gas exploration (up 118 points) due to OPEC and allies agreeing to oil production cut, which sent international crude prices soaring, fertiliser (81 points), chemical (46 points) given healthy margins, food and personal care products (16 points) and cement (10 points).

On the flip side, insurance and automobile assemblers remained the worst performing sectors, posting negative returns of 3.2% and 2.2% week-on-week, respectively.



Scrip-wise major gainers were PPL (up 75 points), FFC (58 points), ENGRO (47 points), LUCK (41 points) and ICI (24 points). While, sectors that contributed negatively to the index were commercial banks (down 62 points) primarily due to foreign selling and automobile assemblers (25 points) amid weak sales data for the month of Nov ‘18.

Foreign investors offloaded stocks worth $12.9 million this week compared to net selling of $2.5 million last week. Selling was concentrated in exploration and production ($4.43 million), commercial banks ($3.5 million) and oil and gas marketing companies ($2.5 million).

On the local front, insurance companies led the bullish sentiments accumulating stocks worth $8 million, followed by individuals ($7.2 million). On the other hand, domestic mutual funds offloaded shares worth $4.8 million.

Among major highlights of the week were; foreign exchange reserves held by the central bank fell by 3.22%, amounted to $7.3 billion, remittances rose up 12.56% to $9.02 billion in Jul-Nov’18, trade deficit shrank to $14.5 billion in five months, auto sales down by 4% in July-Nov, and Pakistan may soon clear K-Electric’s sale.

Published in The Express Tribune, December 16^th, 2018.

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