Local investors remained cautious while foreigners offloaded stocks as tensions between Pakistan and the US reached a new peak following the Nato attack on a Pakistani checkpost.
The Karachi Stock Exchange’s (KSE) benchmark 100-share index slumped 2.4% or 276 points during the week to close at 11,372 points.
An early Saturday morning attack by North Atlantic Treaty Organisation (Nato) helicopters killed at least 24 security personnel and injured 12 soldiers on a Pakistani checkpost in Salala, located in Tehsil Bayzai area of Mohmand Agency.
Pakistan’s response of closing Nato supply routes along with giving US a deadline to vacate the Shamsi base has led to a diplomatic deadlock. The index took another massive tumble on Friday as the US Senate voted to tie strings on future aid to Pakistan, according to a JS Global Capital research note.
Average volumes crawled up 8% but still remained at a dismally level of 37 million shares. Cautious stance of the foreigners persisted as they offloaded shares worth $2.3 million.
On the macro economic front, the State Bank of Pakistan’s decision to keep discount rate on hold at 12% also kept investor activity under check.
The market reacted in a silent manner to the unchanged discount rate as the market expected a 50 basis point cut.
The KSE benchmark index underperformed regional markets by 7.2% as majority bourses ended in the green, according to JS Global Capital.
DG Khan Cement outperformed the market by 4.4% on the back of sustained high cement prices.
Engro also performed better than the market by rising 1.3 on restoration of gas supply to the company while Fauji Fertilizer underperformed the benchmark index by 5.5% owing to cut in fertiliser urea prices.
With respect to price pressures, there was a slight breather as inflation stood at 10.19% for November, a figure last recorded in October 2009. Furthermore, Oil and Gas Regulatory Authority in its monthly oil price revision also notified an increase in petroleum products prices in the range of 1% to 5%.
Outlook
The stock market is expected to continue on a similar note with developments on the Nato strikes and the law & order situation during religious holidays holding the trump card in determining market direction when it re-opens on Wednesday, according to a KASB Securities research note.
The stock market will remain closed on Monday and Tuesday as the government has declared them public holidays on the occasion of Ashura.
Currency pressure will also have a significant say as the rupee lost 2.4% on a monthly basis and touched a record low of Rs89.01 against the US dollar on Friday.
Investors will also keep an eye on judicial proceeding as the Supreme Court continues its hearing of important cases with likely political ramifications and the steady drainage of foreign portfolio flows, says the note.
Monday, November 28
The stock market fell as investor interest hit rock-bottom following Nato bombings on a Pakistani checkpost. Investor sentiment went down with the missiles as stocks dipped more than 2% intra-day, although they recovered slightly in the second half of the session, according to equity dealers.
Tuesday, November 29
The stock market closed flat although intraday losses were recovered as investors bought heavyweight Oil and Gas Development Company at lower levels. “The market closed marginally up, mainly supported by Oil and Gas Development Company (OGDC),” said Samar Iqbal, a dealer at Topline Securities Ltd. OGDC gained 0.81% to close at Rs153.01.
Wednesday, November 30
The stock market took a back seat as investors shifted their focus towards the monetary policy due later in the evening. The government’s decision to tax industry on gas consumption did not help the cause, said Elixir Securities equity dealer Faisal Bilwani.
Thursday, December 1
Lacklustre trading and directionless market was the theme again for the trading session at the bourse.
The State Bank of Pakistan’s decision to keep policy rate unchanged failed to bring any momentum despite the market expecting a 50 basis points rate cut, said Elixir Securities equity dealer Sibtain Mustafa.
Friday, December 2
The stock market declined massively ahead of the long weekend as investor sentiments remain dampened.
Across the board panic selling pushed the benchmark index to a five-week low, said Topline Securities equity dealer Samar Iqbal. Investors also remained wary of the law and order situation during the long weekend, added Iqbal.
Published in The Express Tribune, December 4th, 2011.
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