Weekly review: Poor indicators shave 518 points off KSE-100
Dull trading witnessed as investors offload and choose to remain on sidelines
KARACHI:
Bears dominated the stock market in the outgoing week as the index finished three of the five trading sessions in the red on back of poor macroeconomic outlook. The KSE-100 index shed 518 points or 1.5% to settle at 33,672 points.
The week kicked off on a negative note as investors grew concerned over the slowdown in economy. The participants opted to remain largely on the sidelines amid bleak near-term outlook following the release of an International Monetary Fund (IMF) staff report.
The release of Rs200-billion Sukuk for oil and gas marketing companies and the power sector also added to anxieties, and pushed the market lower. Resultantly, heavy selling was witnessed in related stocks.
Despite these developments, the index made a brief recovery on Tuesday following an analyst briefing by the State Bank of Pakistan, which aided in restoring investor confidence. However, the momentum could not be sustained as the index retreated in the following session due to absence of triggers.
Lacklustre trading continued for the remaining sessions. The KSE-100 index finished in green on Thursday but once again turned bearish as the central bank announced the date for monetary policy. Additionally, uncertainty amongst participants on the market support fund after ceiling imposed by IMF on government guarantees coupled with a possible hike in the policy rate also aggravated matters.
Activity slowed down with volumes dipping 41% week-on-week to 51 million shares, while value traded declined 36% to $13 million. “It is pertinent to note that the volumes in the outgoing week were lowest in the last seven years (last witnessed 28 million in Jan-2012),” stated a Topline Securities report.
Sector-wise negative contributions came from commercial banks (down 81 points), power generation and distribution (77 points), oil and gas marketing companies (53 points), automobile assembler (53 points), and cement (50 points).
The decline in autos was primarily attributable to the news highlighting that Honda Atlas and Indus Motor have decided to cut down their production by 20-25% owing to lesser demand. Furthermore, according to latest automobile sales, passenger car sales depicted the highest decline in the last six years, which also added to the investor’s concerns.
Scrip-wise, negative contributions came from HUBC (down 53 points), PSO (37 points), BAHL (29 points), DGKC (24 points) and INDU (21 points). On the other hand, positive scrip-wise contributions came from FFC (up 34 points), DAWH (16 points), and EFERT (5 points).
Foreign buying was witnessed this week clocking-in at $5.91 million compared to a net buy of $5.92 million last week. Buying was witnessed in cement ($3.0 million) and power generation and distribution ($2.3 million). On the domestic front, major selling was reported by companies ($7.6 million) and mutual funds ($5.3 million).
Among major news of the week were; car sales slid 4.2% to 207,630 units in FY2019, government, industry agreed on increase in urea prices by Rs110 per bag, RLNG prices increased up to 4% for July, bank deposits hit all-time high of Rs14.46 trillion mainly due to amnesty scheme and seasonal targets, and all SROs relating to zero-rating facility rescinded.
Published in The Express Tribune, July 14th, 2019.
Bears dominated the stock market in the outgoing week as the index finished three of the five trading sessions in the red on back of poor macroeconomic outlook. The KSE-100 index shed 518 points or 1.5% to settle at 33,672 points.
The week kicked off on a negative note as investors grew concerned over the slowdown in economy. The participants opted to remain largely on the sidelines amid bleak near-term outlook following the release of an International Monetary Fund (IMF) staff report.
The release of Rs200-billion Sukuk for oil and gas marketing companies and the power sector also added to anxieties, and pushed the market lower. Resultantly, heavy selling was witnessed in related stocks.
Despite these developments, the index made a brief recovery on Tuesday following an analyst briefing by the State Bank of Pakistan, which aided in restoring investor confidence. However, the momentum could not be sustained as the index retreated in the following session due to absence of triggers.
Lacklustre trading continued for the remaining sessions. The KSE-100 index finished in green on Thursday but once again turned bearish as the central bank announced the date for monetary policy. Additionally, uncertainty amongst participants on the market support fund after ceiling imposed by IMF on government guarantees coupled with a possible hike in the policy rate also aggravated matters.
Activity slowed down with volumes dipping 41% week-on-week to 51 million shares, while value traded declined 36% to $13 million. “It is pertinent to note that the volumes in the outgoing week were lowest in the last seven years (last witnessed 28 million in Jan-2012),” stated a Topline Securities report.
Sector-wise negative contributions came from commercial banks (down 81 points), power generation and distribution (77 points), oil and gas marketing companies (53 points), automobile assembler (53 points), and cement (50 points).
The decline in autos was primarily attributable to the news highlighting that Honda Atlas and Indus Motor have decided to cut down their production by 20-25% owing to lesser demand. Furthermore, according to latest automobile sales, passenger car sales depicted the highest decline in the last six years, which also added to the investor’s concerns.
Scrip-wise, negative contributions came from HUBC (down 53 points), PSO (37 points), BAHL (29 points), DGKC (24 points) and INDU (21 points). On the other hand, positive scrip-wise contributions came from FFC (up 34 points), DAWH (16 points), and EFERT (5 points).
Foreign buying was witnessed this week clocking-in at $5.91 million compared to a net buy of $5.92 million last week. Buying was witnessed in cement ($3.0 million) and power generation and distribution ($2.3 million). On the domestic front, major selling was reported by companies ($7.6 million) and mutual funds ($5.3 million).
Among major news of the week were; car sales slid 4.2% to 207,630 units in FY2019, government, industry agreed on increase in urea prices by Rs110 per bag, RLNG prices increased up to 4% for July, bank deposits hit all-time high of Rs14.46 trillion mainly due to amnesty scheme and seasonal targets, and all SROs relating to zero-rating facility rescinded.
Published in The Express Tribune, July 14th, 2019.