Weekly review: Volatile week ends marginally in the green

Developments on internal and external fronts keep index from making substantial gains

KARACHI: The stock market witnessed a fairly volatile trading week following internal and external political turbulence, however, it finally finished just 15 points or 0.04% up to settle at 40,849 points.

On the external front, matters remained heated with India over multiple incidences of line of control violation from Indian troops.

“Last week, it was the verdict on an ex-army chief-cum-ex-president, whereas skirmishes at the eastern border were the point that the market fixated on this week,” said JS Global analyst Ahmed Lakhani.

The government also found itself in a difficult diplomatic position after Prime Minister Imran Khan called off his scheduled attendance at the Kuala Lumpur summit following his recent visit to Riyadh. It seemed that the crown prince was not happy with Malaysia’s attempt to build a platform that could potentially challenge the Organisation of Islamic Cooperation (OIC).

Trading commenced on a negative note as the market lost over 800 points in the very first trading session of the week as it came under pressure from increased political uncertainty and beginning of the rollover week. In addition to this, internal and external headwinds coupled with weak economic cues dragged the market lower. The spillover impact of the government’s weak position on the ruling of former president Pervez Musharraf’s treason case fuelled bearish sentiments further.

However, the index recovered in the next two sessions mainly on the back of the receipt of $454 million from the International Monetary Fund (IMF) following a positive outlook of Pakistan given in its first review of the economy. Moreover, alleviation of external tensions mainly at the line of control lent further support. Making news during the outgoing week, the prediction of another potential mini-budget earlier next year irked investors and eroded the bullish sentiments.

As the rollover week approached an end, the market exhibited a U-turn and saw investors offload shares in range bound trading session. Trading remained closed at the Pakistan Stock Exchange (PSX) on Wednesday owing to Christmas and birth anniversary of Quaid-e-Azam Muhammad Ali Jinnah.

Analysts expect the market to perform better in January as fresh allocations would be made by the global funds.

Investor participation remained subdued in the holiday season as volumes traded dipped 23% to 230 million, while average value traded fell 35% to $54 million. In terms of sectors, positive contributions came from commercial banks (43 points), power generation and distribution (42 points), oil and gas marketing companies (19 points), engineering (15 points) and cement (13 points).

On the other hand, negative contribution came from insurance (31 points), tobacco (31 points), automobile parts and accessories (21 points) and fertilisers (17 points).  Scrip-wise, positive contribution was led by Engro (70 points), Hubco (55 points), Oil and Gas Development Company (39 points), PSO (20 points) and UBL (18 points).

Foreigners turned net sellers this week clocking-in at $2.9 million compared to a net buying of $3.1 million last week.

Selling was witnessed in exploration and production sector ($1.5 million) and commercial banks ($0.7 million).

On the domestic front, major buying was reported by insurance companies ($10.5 million) and mutual funds ($7.2 million).  Among major news of the week was; Pakistan Petroleum announced two oil and gas discoveries in Sindh and Balochistan, Nepra allowed distribution companies to charge additional Rs1.56 per unit, rice exports increased 39% to 1.6 million tons in five months and State Bank of Pakistan reserves jumped $14 million to $10.9 billion.

Published in The Express Tribune, December 29^th, 2019.

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