KARACHI: Bears dominated the Pakistan Stock Exchange this week as the index declined 225.36 points or 0.55% to settle below the 41,000-mark. The KSE-100 index snapped its five-week winning streak as economic uncertainty and an overall lack of triggers led the index to retreat.
The week kicked off on a positive note, with investors accumulating stocks on back of planned visit by Saudi Crown Prince Mohammad bin Salman to Pakistan. Participants were also overjoyed by the news of $2.5 billion worth of deposit by China in the State Bank of Pakistan to support Pakistan’s fast depleting foreign exchange reserves.
The trend changed as the index dropped on Wednesday. Investors opted to book profits and remain on the sidelines as news of Finance Minister Asad Umar informing the prime minister that the IMF programme was not in the interest of Pakistan dented sentiments. The bearish sentiment continued for the following two sessions, as poor corporate results and profit-taking drove the index lower.
Moreover, concerns regarding the economic scenario, particularly the external account and the fiscal deficit, stood firmly in place, which affected the market momentum. The downgrade in Pakistan’s rating from B to B- by Standard and Poor’s (S&P) also added to the negative mood.
Investor participation increased with average daily trading volumes rising 10% for the week to stand at 192 million shares, while average traded value surged 26% to $62 million.
Looking at the sector-wise performance, positive contribution was led by cement (up 106 points), following a correction in international coal price by 4% to $86 per ton, automobile assembler (28 points) and pharmaceutical (20 points) stocks.
Negative contribution came from commercial banks (down 185 points), due to selling from mutual funds and insurance companies, oil and gas exploration companies (83 points), due to decline in international oil price, oil and gas marketing companies (52 points), tobacco (33 points) and chemicals (25 points).
Scrip-wise, major losers for the week were HBL (down 79 points), UBL (47 points), Dawood Hercules (41 points), Pakistan Petroleum (41 points) and Oil and Gas Development Company (36 points).
Foreigners remained net buyers during the week, valuing a net $12.2 million compared to a buying of $12.3 million in the preceding week.
“This is the third consecutive week for net foreign buying, where banking sector witnessed the highest net buying by foreigners ($4.8 million),” added JS analyst Ahmed Ladhani.
Heavy buying was witnessed in commercial banks ($4.7 million) and fertilisers ($2.7 million). On the local front, selling was reported by mutual funds ($22.6 million), followed by other organisations ($1.1 million).
Major highlights of the week included; the State Bank of Pakistan’s (SBP) reserves escalated by $38 million to $8.19 billion, the government’s proposal to waive off Rs200 billion under GIDC settlement mechanism, finance minister ruled out downward revision of FBR’s revenue target, Pakistan signed $10-billion gas pipeline agreement with Russia and the federal government officially revised downward the 5.8% economic growth rate in the last year of the Pakistan Muslim League-Nawaz (PML-N) government’s tenure to 5.2%.
Published in The Express Tribune, February 10th, 2019.