Weekly review: KSE-100 stays under pressure in week marked by turbulence

Benchmark index slips 45 points, but trading volumes increase

Our Correspondent April 21, 2019

KARACHI: Turbulence and uncertainty marred the outgoing week at the Pakistan Stock Exchange as a number of developments made headlines, putting the benchmark KSE-100 index under constant pressure.

The index ended the week with a slight fall of 45 points or 0.1% and settled at 37,292 points.

The week kicked off on a positive note as investors tracked the finance minister’s meetings with the International Monetary Fund (IMF) and World Bank in Washington. Sentiments remained elevated in the wake of reports that Pakistan had reached an agreement with the IMF on a three-year bailout package and an IMF mission was expected to visit Pakistan by the end of April.

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Investors were upbeat despite rumours of a major reshuffle in the federal cabinet. However, the trend reversed in the following session as investors opted to book profits and stood on the sidelines after announcement of some corporate results. Things aggravated further on Wednesday when the index nosedived over 600 points because of delay in approval of a tax amnesty scheme. The bearish mood was also fuelled by reports that the State Bank of Pakistan was going to issue a new regulation for the transfer of all government deposits in banks to a single treasury account.

Rumours were put to rest as Asad Umar was removed from the position of finance minister as part of a major reshuffle in the cabinet. Despite his exit, the market rebounded and remained in the black.

The appointment of Abdul Hafeez Shaikh as adviser to the prime minister on finance helped restore investor confidence, which propelled the index that gained nearly 500 points on last trading day of the week. Also aiding the market’s climb was an announcement by the central bank that any decision on transferring government’s bank deposits to the Treasury Single Account had not yet been taken.

Investor participation picked up during the week as average daily trading volumes rose 18% to 176 million shares while average daily traded value jumped 16% to $39 million.

In terms of sectors, negative contribution was led by tobacco companies (down 59 points), cement-makers (55 points) and engineering companies (26 points). On the flip side, the sectors that helped the index advance were fertiliser (up 72 points), oil and gas exploration (26 points), automobile assembly (25 points) and power generation and distribution (25 points). Stock-wise, major negative contribution came from PMPK (down 32 points), Bank AL Habib (29 points), Pakistan Tobacco Company (27 points) and BOP (24 points). Positive contribution came from Fauji Fertiliser Company (up 78 points), UBL (58 points), Pakistan Petroleum Limited (37 points) and Hubco (36 points).

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Foreign selling continued during the outgoing week as well, which came in at $1.9 million compared to net selling of $2.2 million in the previous week. Selling was witnessed in exploration and production companies ($5.3 million) and oil and gas marketing companies ($0.4 million). On the domestic front, major buying was reported by companies ($4.6 million) and individuals ($2.3 million).

Among major highlights of the week were the current account deficit narrowing 29.4% to $9.5 billion in nine months, government considering channelling cash resources to the State Bank from commercial banks, govt mulling over fuel price adjustment for coal-fired power plants, foreign exchange reserves declining $1 billion and pharma companies announcing price cuts.

Published in The Express Tribune, April 21st, 2019.

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