KSE-100 creeps up in topsy-turvy trading

Bearish, bullish pressures restrict movement of KSE-100 that gains 163 points

KARACHI:

Bears and bulls locked horns at the Pakistan Stock Exchange to take hold of the market in the outgoing week as the KSE-100 index underwent a roller-coaster ride due to buying activity at the beginning of the week and selling pressure towards the end. A mixture of upside and downside pressures restricted the index’s movement and it registered a marginal rise of 163 points, or 0.38%, ending the week at 43,395.78 points. “Range-bound activity was witnessed during the week,” commented JS Global analyst Amreen Soorani.

The week kicked off on a positive note on Monday as the market climbed over 600 points in the first two trading sessions primarily due to the receipt of $3 billion from Saudi Arabia for depositing in the State Bank of Pakistan, which strengthened investor sentiment. Moreover, the approval of $1 billion Economic Stabilisation Programme by the Asian Development Bank painted an optimistic outlook for the economy and drove up the stock market. Robust cement sales in November, which depicted 7% year-on-year growth, indicated a recovery in economic activity, fuelling the rally at the bourse. The market reversed trend in the middle of the week and shed value in the remaining sessions as Pakistan reported the first case of Omicron variant of Covid-19.

In addition, the rebound in global energy and commodity prices indicated a further increase in inflation reading in Pakistan, which restricted the KSE-100 index from posting gains. A lofty import figure for November at around $8 billion marred stock trading throughout the week, sparking fears of a jump in imported inflation and further depreciation of the rupee. On the other hand, trading activity remained dull as investors expected imports to balloon during the ongoing month as well. The upcoming monetary policy announcement also played on investors’ mind.

Expecting a sharp increase in policy rate by the State Bank next week, market participants adopted a wait-and-watch stance in latter part of the week and chose to remain largely on the sidelines. The rupee’s slide persisted throughout the week with the currency touching a new alltime low against the dollar on Friday, which dented the interest of investors, who resorted to profit-booking. “We expect the market to remain range bound in the upcoming week,” stated Arif Habib Limited in a report.

Average daily traded volumes fell 36% weekon-week to 204 million shares while average daily traded value plunged 54% week-on-week to $42 million. In terms of sectors, positive contribution came from oil and gas exploration (320 points), technology and communication (257 points), food and personal care products (32 points), chemical (29 points) and insurance (10 points). On the flip side, sectors which contributed negatively were commercial banks (187 points) and cement (112 points).

Stock-wise positive contributors were TRG Pakistan (208 points), Pakistan Petroleum (155 points), Oil and Gas Development Company (101 points), Systems Limited (49 points) and Mari Petroleum (34 points). Meanwhile, negative contribution came from Engro (66 points), HBL (64 points) and UBL (44 points). Foreign selling continued during the week, which came in at $1 million compared to $62.84 million in the previous week.

Major selling was witnessed in cement firms ($1.2 million), fertiliser manufacturers ($0.5 million) and exploration and production companies ($0.3 million). On the domestic front, buying was reported by other organisations ($3.9 million), followed by companies ($2.1 million) and individuals ($1.3 million). Major news of the week included a reduction in general sales tax on medicine raw material, European Union hailing Pakistan’s progress on FATF action plan, steel bar prices rising to Rs197,500 per ton and circular debt soaring to Rs2.419 trillion by October 31.