Weekly review: KSE-100 loses 535 points amid lacklustre trading

Absence of triggers, upcoming monetary policy announcement keep investors sidelined

KARACHI: The stock market witnessed another lacklustre week shrouded in uncertainty due to lack of positive triggers to provide a direction to the market. Resultantly, the KSE-100 ended the week with a loss of 535 points or 1.2% at 42,633 points.

“The range-bound performance of the market may be attributed to lack of potent positive triggers,” said JS Global analyst Ali Zaidi.

Trading during the week commenced on a negative note attributable to the Oil and Gas Regulatory Authority’s (Ogra) proposal of a gas price hike, which was later delayed by the Economic Coordination Committee (ECC).

In addition to this, the government decided to eliminate the Gas Infrastructure Development Cess (GIDC) on the fertiliser sector in a bid to reduce prices of urea which may hurt bottom line of some companies due to different types of gas tariffs.

During the week, Prime Minister Imran Khan, along with key officials of the country, departed for Davos to attend the World Economic Forum which also impacted the direction of the market. During the trip, PM Imran met with many international personalities, including US President Donald Trump.

Moreover, the possibility of an early review of Pakistan from the Financial Action Task Force (FATF) also sparked uncertainty at the bourse prompting investors to stay on the sidelines.

The index shed 600 points cumulatively during the first four trading sessions of the week as selling pressure persisted with investors resorting to book profits. During mid-week, a new virus, similar to SARS, emerged in China and sparked fear of an epidemic which severely impacted oil prices around the globe. The shockwaves also reverberated at the local bouse as oil scrips suffered losses.

On the other hand, appointment of financial adviser to sell stake of OGDC further fuelled the decline in exploration and production sector.

The last session of the week saw the market bounce back and report gains as investors pinned hopes on Pakistan’s likely exclusion from the FATF grey list by June 2020 as they expected diplomatic support in the FATF meeting to be held in Paris next month. The US and China, along with many other countries, have hailed efforts made by Pakistan in this regard sparking anticipation of the country’s exit from the grey list.

With the investors remaining on the sidelines, average volumes dropped 24% week-on-week to 187 million, while average value traded rose 6% to $51 million.

In terms of sectors, major contribution to the downside was led by fertiliser (204 points) due to removal of GIDC, commercial banks (87 points) amid profit taking, oil and gas marketing companies (71 points), oil and gas exploration companies (61 points) due to decline in international oil prices and tobacco (61 points).

Scrip-wise, major losers were Engro (153 points), OGDC (93 points), Engro Fertiliser (80 points), Pakistan Tobacco (53 points), and Habib Metropolitan Bank (36 points). On the other hand, Fauji Fertiliser (56 points), Mari Petroleum (48 points), and Colgate Palmolive (27 points) contributed positively to the index.

Foreign buying continued this week clocking-in at $4.81 million compared to a net buy of $2.81 million last week. Buying was witnessed in oil and gas marketing companies ($7.73 million) and fertiliser ($1.88 million).

On the domestic front, selling was reported by individuals ($19.31 million) followed by broker proprietary trading ($3.05 million).

Among other major news of the week were; a new textile policy is on the cards which could increase textile exports to $25 billion by 2025, Pakistan fell three spots on the Corruption Perception Index and large scale manufacturing declined by 5.93% in the first five months of fiscal year 2019-20.

Published in The Express Tribune, January 26^th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.