Weekly review: KSE-100 dips 471 points amid lack of positive triggers

Tensions with India and FATF meetings keep bourse under pressure

Our Correspondent February 24, 2019

KARACHI: Stocks took a beating in the outgoing week as geo-political tensions between India and Pakistan weighed on investor sentiments. The benchmark KSE-100 index fell 471 points or 1.16% to close at 40,016.

“The benchmark index continued its downward trend this week and closed in the red for the third consecutive week (down 3% cumulatively),” said Topline Securities in its report.

The stock market commenced trading on a negative note on Monday despite announcement of massive investments by Saudi Crown Prince Mohammad bin Salman during his visit to Pakistan. The two countries signed investment agreements for various sectors worth $21 billion.

Market watch: KSE-100 sheds 342 points as investors resort to profit-taking

However, the positive development failed to encourage investors, who remained on the sidelines.

The downtrend continued on Tuesday as well as growing tension between India and Pakistan and weak corporate earnings aggravated things for the investors. Imposition of 200% regulatory duty on imports from Pakistan in the aftermath of Pulwama attack added to the bearish mood.

Breaking away from the losing streak, the benchmark index returned to its winning ways on Wednesday as investors were encouraged by strong results of some banks. The optimism, however, could not be sustained and the index fell in the following two sessions in the wake of profit-booking by investors amid a lack of positive triggers.

Meetings of the Financial Action Task Force (FATF) to review Pakistan’s action plan to fight money laundering and terrorism financing also worried investors, who traded stocks with caution.

Trading activity remained sluggish during the week and average daily volumes declined 22% to 105 million shares while average traded value fell 14% to $39 million.

Market watch: KSE-100 recovers to end positive as foreign investors turn buyers

Sectors that dragged the index down were power generation and distribution (down 142 points) due to absence of dividend declaration in their result announcements, commercial banks (139 points) amid lower-than-expected results, pharmaceuticals (35 points), transport (27 points) and tobacco (26 points).

On the other hand, positive contribution was led by oil and gas exploration companies (up 85 points) due to a surge in international crude oil prices.

Among individual stocks, major losers were United Bank (down 120 points), Habib Bank (115 points), Hubco (68 points), Kapco (56 points) and Sui Northern Gas Pipelines (37 points).

Foreign buying continued this week as well, which came in at $3.5 million compared to net buying of $12.1 million last week. Major buying was witnessed in cement shares ($3.3 million) and commercial banks ($1.4 million).

On the domestic front, selling was reported by individuals ($4.7 million), followed by companies ($1 million).

Among major highlights of the week were current account deficit shrinking 16.7% in seven months, IMF negotiations nearing conclusion, imposition of 200% regulatory duty by India, foreign direct investment hitting six-month low as concerns over IMF resurfaced, finalisation of a roadmap for $21 billion worth of Saudi investments, Nepra raising power tariff by Rs1.8 per unit and fiscal deficit crossing 2.7% of GDP in 1HFY19.

Published in The Express Tribune, February 24th, 2019.

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