Weekly review: Stocks witness volatile ride, end 184 points down

Outlook of Pakistan’s economy, talks with IMF and World Bank drive index

KARACHI: The Pakistan Stock Exchange witnessed a rough week as the index bounced back from nearly three-year low to finish a mere 184 points down at 37,338 points.

Trading kicked off on a bearish note, as World Bank’s report on Pakistan’s economy triggered massive selling, leading the index to dive 600 points. However, the following session managed to post a decent recovery on institutional interest amid upbeat data on trade deficit for Jul-Mar FY19, which shrank 14%.

Furthermore, affirmation by the finance minister that the rupee had stabilised and economic growth would hit a 15-year high in FY23 also added to the slightly bullish sentiment. Unfortunately, the momentum could not be sustained as the index once again tumbled into the red zone following the International Monetary Fund (IMF) trimming the country’s GDP growth rate to an average of 2.9% during 2019-2020

.Weekly review: KSE-100 index posts gains for third successive week

Investors were also concerned over possible downgrade by MSCI of Pakistan’s bourse to the frontier market status. Sentiments were uplifted as the finance minister visited Washington during the week to meet the World Bank and IMF teams. It was reported that talks have now reached final stages, which led the index to make a handsome recovery on the last trading day of the week.

Nonetheless, attractive valuations also enticed investors, which led to an increase of 25% in average daily traded volume to 148 million shares, while average daily traded value was up 36% to $34 million.

Contribution to the downside was led by cement (down 210 points) as news of cement players cutting prices eroded investor confidence, oil and gas exploration companies (64 points), fertiliser (39 points), textile composite (19 points), and pharmaceuticals (18 points).

On the flip side, positive contribution came from power generation and distribution (up 73 points), commercial banks (72 points), oil and gas marketing companies (20 points), food and personal care products (12 points), and automobile assembler (12 points).

Scrip-wise, negative contributions came from LUCK (down 61 points), FCCL (36 points) and DGKC (36 points).

Foreigner offloaded stocks worth $2.17 million during the week compared to a net sell of $3.7 million last week. Major selling was witnessed in corporates ($2.65 million) and mutual funds ($3.4 million). On the local front, buying was reported by companies ($3.64 million) followed by banks ($3.97 million), while brokers remained net buyers with the amount of $1.78 million.

Among major highlights that moved the bourse were; automobile sales data depicted 14% month-on-month improvement in March 2019, the government reviewed FBR’s proposal for Rs729-billion additional taxes for FY20, SBP reserves fell $220 million to $10.27 billion, amnesty scheme planned to begin from April 15 and remittances soared to $16.1 billion.

Published in The Express Tribune, April 14^th, 2019.

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