KARACHI: The stock market continued to be in doldrums for another week as concerns over disappointing economic indicators mounted further.
During the week, issues relating to the impasse over passage of federal budget in the National Assembly and macroeconomic uncertainty persisted, which pushed the benchmark KSE-100 index down, which closed at 33,902 points, recording one of the largest weekly falls of 3.5% or 1,223 points.
Starting on a negative note, the market marched south for four successive sessions during the week. Stocks failed to attract investors as they preferred to remain on the sidelines before the IMF executive board meeting on July 3.
Market watch: KSE-100 ends last session of fiscal year on a positive note
Negative sentiments were also fuelled by the statement of outgoing Financial Action Task Force (FATF) President Marshall Billingslea that Pakistan had failed to implement the action plan and there was a possibility of it being placed on the blacklist in October 2019.
Moreover, gas tariff hike of up to 191% was approved by the Economic Coordination Committee (ECC), which would aggravate inflationary pressures in the economy, lending credence to concerns of further monetary tightening by the State Bank of Pakistan (SBP).
Selling pressure was also seen due to the downslide of the rupee against the US dollar, which depreciated Rs3 over the week to close at Rs160.05. Furthermore, Fitch Solutions, in its latest report, revised down Pakistan’s gross domestic product (GDP) growth forecast for FY19 and FY20 to 3.2% and 2.7% respectively. On the other hand, gold surged to Rs79,600 per tola as investors moved their money to safe havens. However, in the last trading session, the index managed to close positive primarily due to 2.4% appreciation of the rupee.
Moreover, Afghan President Ashraf Ghani visited Pakistan to improve ties and boost bilateral trade.
Investor participation remained positive as average daily trading volumes rose 17.4% to 147 million shares while average daily traded value went up 5.7% to $29 million. In terms of sectors, negative contribution came from commercial banks (down 306 points), oil and gas exploration companies (279 points), fertiliser producers (197 points), cement manufacturers (126 points) and oil and gas marketing companies (81 points).
Stock-wise negative contribution came from HBL (down 142 points), Pakistan Petroleum Limited (132 points), Oil and Gas Development Company (75 points) and Lucky Cement (70 points).
Market watch: KSE-100 falls 314 points as Fitch cuts growth forecast
National Foods (up 26 points), Fatima Fertiliser (19 points) and HBL Growth Fund (13 points) supported the KSE-100 index. Foreign buying was witnessed during the week under review, which came in at $7.9 million compared to net selling of $5.7 million last week. Buying was witnessed in cement companies ($4.5 million) and commercial banks ($3.6 million).
On the domestic front, major selling was reported by mutual funds ($14.7 million) and individuals ($4.7 million).
Major news of the week included May exports going down 1.72% year-on-year, Qatar pledging $3 billion injection in the form of deposit and direct investment, borrowing from the SBP doubling to Rs2.7 trillion and Prime Minister Imran Khan hinting at extending the deadline for the asset declaration scheme.
Published in The Express Tribune, June 30th, 2019.
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