Stocks fall in tumultuous week

Russia-Ukraine tensions, hike in petrol prices mar trading at bourse

KARACHI:

The Pakistan Stock Exchange experienced a tumultuous week marred by escalation of Russia-Ukraine unrest, spike in oil prices and rise in trade deficit. As a result, the KSE-100 remained volatile and slid 404 points or 0.9% to close at 45,676 level.

“Major reason for the negative momentum this week was higher oil prices triggered by the Ukraine-Russia conflict,” said JS Global analyst Muhammad Waqas Ghani. “The government also increased petrol prices by Rs12.03 per litre during the week which also included impact of increased petroleum levy (Rs4 per litre).”

Trading on Monday began with a dip and the KSE-100 dived on the back of fears of a possible conflict between Russia and Ukraine which sent international oil prices soaring. Due to the looming crisis, panic selling was witnessed at international stock markets and the trickle down effect was borne by the local bourse as well.

Investors rushed to secure their positions and offloaded stocks in view of deteriorating global cues. On the other hand, uncertain political situation of the country further dampened the trading ecosystem.

The market took a breather in the next session as the easing of international tensions aided it to post a recovery.

Bears staged a return to the bourse midweek and dragged it nearly 300 points down over a two day period owing largely to historic increase in the prices of petroleum products by the government.

Buoyed by the uptrend in global oil prices, the leadership of the country raised the rates of petrol and diesel by a sharp margin to an all time high which dented investor’s confidence on the economy.

The steep hike sparked fears of an ascent in the inflation reading and signaled further deterioration of the purchasing power of people which encouraged the market players to offload their holdings. Fuelling the fall, prominent listed companies posted dismal results that were far below the market consensus and pulled the index lower.

The final session of the week saw the market turn bullish and post gains, driven by the approval of a bill aimed at implementation of weighted average cost of gas (Wacog) all across the nation.

Market participants cherished the development as it is expected to help rationalise gas pricing structure and made fresh buying.

“We expect the market to remain positive in the upcoming week,” stated a report from Arif Habib Limited. “Prime Minister Imran Khan is expected to visit Moscow next week, with agenda of two mega gas pipeline projects in order to cater depleting gas reserves. Signing of a commercial agreement during this visit will be a key catalyst.”

During the week under review, average daily traded volume fell 8% week-on-week to 191 million shares while average daily traded value fell 36% week-on-week to $30 million.

In terms of sectors, negative contributions came from commercial banks (88 points), fertilisers (68 points), power generation and distribution (66 points), technology and communication (39 points) and cement (37 points).

On the flipside, sectors which contributed positively were automobile assembler (9 points), chemical (9 points) and oil and gas exploration (5 points).

Scrip-wise negative contributors were Hubco (67 points), Engro (62 points), Meezan Bank (36 points), Systems Limited (35 points) and Dawood Hercules (34 points).

Meanwhile, scrip-wise positive contribution came from Engro Fertiliser (55 points), Sui Northern Gas Pipelines (24 points) and Millat Tractors (22 points).

Foreign selling continued in the outgoing week, clocking-in at $1.97 million compared to a net sell of $5.9 million last week. Major selling was witnessed in technology ($1.5 million) and commercial banks ($0.5 million).

On the local front, buying was reported by banks ($4.9 million) followed by individuals ($2.4 million).

Other major news of the week included sharp hike in petrol price hiked of Rs12 per litre, ECC approving urea import cost estimates, ECC approving urea import cost estimates, January textile group exports declining 4.38% to $1.55 billion month-on-month and foreign exchange reserves falling $231 million.

Published in The Express Tribune, February 20^th, 2022.

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