KARACHI: Bears maintained their grip at the Pakistan Stock Exchange as the index saw a further decline of 1,406 points or 3.9% during the week to settle at 34,717 points.
With the beginning of Ramazan this week, the stock market witnessed dull interest, which led the volumes to slump. Talks between the government and the International Monetary Fund (IMF) are in the final round and an announcement regarding a bailout package is expected soon. This uncertainty also played a significant role in keeping investors wary, who resorted to book profits and remain on the sidelines. The bearish run was seen despite share prices falling to attractive valuations.
The week kicked off on a negative note, continuing the losing streak from the preceding session. This was also aggravated by changes at a high level in the government’s economic team. However, the market managed to end the five-day negative run and finished with a meager gain of 26 points.
Unfortunately, the momentum could not be sustained and the index fell for the three following session, plunging below the 34,800-mark. Apart from the mystery around the IMF talks, the poor macroeconomic indicators also dented sentiments. There was no respite from the selling pressure as the index retreated on the last trading day of the week. Matters also worsened due to economic uncertainty after the National Accounts Committee anticipated a sharp slowdown in economic growth to 3.3% in FY19 - the slowest pace in the past nine years.
Concerns of further interest rate hikes, depreciation of the PKR and fiscal consolidation measures (revision in energy prices, withdrawal of subsidies/tax concessions, etc) also kept the investment sentiment negative. Further, among key events, the market is also looking ahead for semi-annual index review scheduled on May 13, 2019, where participants are concerned on the potential downgrade of Pakistan to frontier market. “KSE-100 closed its sixth consecutive week on a negative note, highest percentage loss in 23 weeks,” stated a Topline Securities report.
Participation took a dive as volumes declined 30% week-on-week to settle at 74 million shares, while value traded was down 22% to $23 million.
In terms of sectors, negative contributions came from fertilisers (down 313 points), oil and gas exploration companies (284 points), cement (130 points), pharmaceuticals (113 points) and oil and gas marketing companies (108 points).
Script-wise, ENGRO (down 131 points), PPL (104 points), SEARL (84 points) and MARI (83 points) took away from the index, whereas, positive contributions came from NESTLE (up 32 points), HBL (21 points), and COLG (11 points).
Foreign buying continued this week clocking-in at $10.4 million compared to a net buy of $4.8 million last week. Buying was witnessed in commercial banks ($10.9 million) and cement ($1 million). On the domestic front, major selling was reported by mutual funds ($10.7 million) and insurance companies ($5.7 million).
Among major highlights of the week were; coal-fired power project’s receivables swell to $150 million, Private sector tax expert was named FBR chairman, public debt surged Rs3.6 trillion to a hefty Rs27.8 trillion, recently disposed finance minister Asad Umar was made member of National Assembly Standing Committee on Finance, Federal budget to be presented after Eid holidays (June 11, 2019), and foreign exchange reserves held by the State Bank of Pakistan (SBP) increased by $179 million to $8.98 billion.
Published in The Express Tribune, May 12th, 2019.
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