Stock market gains 117 points in volatile week

Expectations of interest rate hike kept benchmark index under pressure


Our Correspondent March 31, 2019
PHOTO: AFP

KARACHI: Persistent volatility marred trading at the Pakistan Stock Exchange (PSX) in the outgoing week as developments on the economic front continued to weigh on investor sentiments.

Despite that, the KSE-100 index posted an increase of 117 points or 0.3% to finish the week at 38,649 points.

During the week, market participants remained wary on expectations of a hike in interest rate by the central bank and potential pressure on leveraged sectors. The week kicked off on a negative note as the index lost value, taking cue from the turmoil in international markets, which went down on fears of a global economic slowdown.

However, things took a turn for the positive as inflows of $2.2 billion from China rejuvenated interest in the bourse. Moreover, the easing of political tensions after Supreme Court suspended former premier Nawaz Sharif’s sentence for medical treatment also added to the positive mood.

Bulls maintained their hold on the market and pushed the index up by more than 600 points on Wednesday as clarity emerged in talks with the International Monetary Fund (IMF).

Unfortunately, the momentum could not be sustained and the following session saw the index retreat on fears of further tightening of the monetary policy. The last trading day of the week recorded dull trading as investors awaited the monetary policy announcement. Despite the uncertainty, the index managed to close in the black.

Activity improved as average daily volumes were up 53% week-on-week at 128 million shares while average daily traded value increased 10% at $31 million.

Sectors that contributed positively to the index were oil and gas marketing companies (up 76 points), fertiliser (41 points), automobile assemblers (36 points), pharmaceuticals (25 points) and engineering.

On the flip side, sectors that contributed negatively included power generation and distribution (down 52 points), food and personal care products (23 points) and insurance (23 points).

Stock-wise, major positive contribution came from Sui Northern Gas Pipelines (up 38 points), Millat Tractors (30 points), Bank AL Habib (30 points), Engro (24 points) and UBL (24 points).

Stocks that contributed negatively included HBL (down 64 points), Hubco (54 points) and Nestle (29 points).

Foreign buying continued during the week under review, which came in at $0.5 million compared to net buying of $3.1 million last week. Buying was witnessed in commercial banks ($2.6 million) and exploration and production companies ($1.1 million).

On the domestic front, major selling was reported by individuals ($5.4 million) and companies ($5 million).

Other major news of the week were Gwadar terminal developer planning an IPO for the $85-million project, govt planning to raise power tariff by Rs2 per unit to collect Rs200 billion from consumers, Pakistan considering LNG imports from Saudi Arabia and Malaysia and speculation about Pakistan being demoted to the MSCI frontier market.

Published in The Express Tribune, March 31st, 2019.

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