Market remains stagnant for second week in a row

Investors on sidelines as they awaited FATF outcome, focused on IMF talks and corporate results

KARACHI:  

Dull and lacklustre trading marred the Pakistan Stock Exchange in the outgoing week as the index ended with a marginal gain of six points or 0.01% to close at 40,249 points.

The pending meeting of the Financial Action Task Force over Pakistan’s fate regarding the grey list cast a gloomy shadow over the market. Investors remained on the sidelines and opted to book profits as they awaited outcome of the FATF meeting. The Paris-based task force announced on Friday that its plenary has decided not to blacklist Pakistan after the country showed progress on majority of the actionable points and demonstrated its serious political commitment to curb terror financing and money laundering.

Additionally, the strict stance of the International Monetary Fund (IMF) staff to keep the budgeted revenue targets for FY20 unchanged while talks regarding the release of the third tranche remain ongoing also kept investors nervous.

Following these developments, the KSE-100 continued to oscillate between the red and green zones during the week. Although trading kicked off on a somewhat positive note, the trend could not be sustained as the index fell back in red in the following session.

After a day’s correction, the benchmark KSE-100 index staged a rally on Wednesday on back of expectations of a positive outcome from the FATF review of Pakistan, which fuelled investor optimism. In addition to that, positive corporate results from some major names also lent support to the stock market.

The stock market once again succumbed to profit-taking and retreated in the remaining two sessions as economic uncertainty and foreign capital outflows dented sentiments.

Despite increase in international oil prices by 4.5% week-on-week, oil and gas exploration sector remained under pressure due to foreign selling. That said, average daily volumes for the outgoing week were down 37% to 106 million shares, likewise value traded decreased 23% to $31.2 million.

Contribution to the upside was led by commercial banks (up 133 points) due to financial result of HBL and UBL was better than expectation, cements (up 20 points), textile composite (up 15 points), leather and tanneries (11 points), and automobile parts and accessories (up 9 points).

Scrip-wise, major gainers were HBL (up 70 points), UBL (53 points), OGDC (37 points), MCB (34 points), and FFC (30 points). On the other hand, downside to the index was led by ENGRO (down 65 points), PAKT (54 points), and PSO (48 points).

Foreigners offloaded stocks worth $8.57 million compared to a net sell of $11.15 million last week. Major selling was witnessed in oil and gas exploration companies ($3.02 million) and cement ($2.77 million). On the local front, buying was reported by insurance companies ($7.84 million) followed by other organizations ($3.81 million).

Other major news; Pakistan set to get four-month FATF breather, current account gap narrowed 72% in July-Jan on improved trade balance, foreign exchange reserves held by SBP jumped $74 million to $12.5 billion, hot money inflows crossed $3 billion, and large scale manufacturing contracts 3.4% in first half.

Published in The Express Tribune, February 23^rd, 2020.

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