Weekly review: Bearish trend continues as KSE-100 sheds 361 points

Lack of triggers and foreign selling kept investors sidelined throughout the week.

KARACHI:

The stock market underwent a bearish spell as lack of triggers coupled with foreigners turning net sellers pushed the benchmark KSE-100 index down by 361 points (1.1%) during the week ended February 27.

With the earnings season coming to a close, the market remained devoid of any positive triggers and resulted in investors remaining on the sidelines. The oil and gas sector along with the banking sector were victims of profit-taking, which did not help the KSE-100’s cause.

Investor interest could be judged by declining trading volumes that fell sharply for a second week in a row as the index closed in the red on all five trading days of the week. A slight improvement in volumes towards the end was the only silver lining for market participants.

The direction of foreign flows was a major cause of concern for investors as foreigners again turned net sellers and offloaded net equity worth $9.8 million during the week. It was a blow to investors who had hoped that continued foreign inflows would sustain the market as the earnings season drew to a close.

The heavyweight oil and gas sector led the underperformers with the sector declining 1.4% as a whole. Pakistan State Oil, Attock Refinery Limited and Pakistan Oilfields were worst-hit as they dropped 5%, 4% and 3%, respectively.

The banking sector also came under pressure as MCB Bank witnessed profit-taking during the week and shed 3% of its value during the week. The sector, as a whole, declined 1.4% during the week.

Cements also remained under pressure as the market awaited clarity on the expansion plans of DG Khan Cement. The company’s expansion foray into the southern region is expected to lead to a breakdown in the price agreement between the top manufacturers, which could lead to a price war in the sector.

In all the gloom, the fertilizer sector was a standout performer as Fauji Fertilizer Bin Qasim, Fuji Fertilizer and Engro Corporation saw their share prices climb 5%, 3.4% and 2.8%, and handily outperforming the broader market. The sector contributed 96 points to the KSE-100 during the week. Average trading volumes dropped sharply by 19.1% and stood at 171.5 million shares traded per day. Similarly, average daily values also fell 21.9%, and stood at Rs9.09 billion daily. The Karachi Stock Exchange’s market capitalisation stood at Rs7.62 trillion ($74.88 billion) at the end of the week.

Lack of triggers is expected to continue and hence the direction of foreign flows will play a major role in the direction of the overall market. The CPI numbers for the month of February will also be revealed in the coming week and could act as a much-needed trigger if the number again comes below expectations.

Winners of the week

Indus Motor



Indus Motor Company Limited was created through a joint venture agreement between the House of Habib, the Toyota Motor Corporation and the Toyota Tsusho Corporation, in order to assemble, manufacture and market Toyota vehicles. The company is also the sole distributor of Toyota vehicles in Pakistan.

Colgate Palmolive



Colgate-Palmolive Pakistan Limited manufactures and sells detergents, personal hygiene, and a variety of other products.

Murree Brewery



Murree Brewery Company Limited specialises in the manufacture of beer and Pakistan Made Foreign Liquor. The group also has juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar respectively. Their glass division manufactures all the group’s bottles and jars.

Losers of the week

Grays of Cambridge



Grays of Cambridge (Pakistan) Limited is a holding company. The company, through its subsidiaries, manufactures and exports sporting goods, specialising in hockey sticks.

Pace Pakistan Limited



Pace Pakistan Limited develops real estate in both the residential and commercial sectors. The company develops and constructs shopping malls, supermarkets, and apartments.

PakGen Power Limited



Pakgen Power Limited generates and distributes electricity. The company operates an oil-fired electricity generating plant in Mehmood Kot - Muzaffargarh, Punjab.

Published in The Express Tribune, March 1^st, 2015.

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