KARACHI: Investors at the Pakistan Stock Exchange squared their positions and switched to profit-taking in the outgoing week, which also happened to be the rollover week for future contracts.

Political uncertainty and the new disclosure requirements by the Securities and Exchange Commission of Pakistan also put pressure on the market.

The benchmark KSE-100 index, which rallied by a massive 4,000 points to cross over the 50,000-point level in the days around the Panama Papers case verdict, went into correction in the outgoing week ahead of the long weekend.

The index lost 407.75 points, or 0.82 per cent, during the week and closed at 49,301.

Average daily volume increased 29pc over the previous week to 359 million shares and the average traded value edged higher by 7.4pc to $170m.

On the liquidity front, foreign investors were sellers of $10.7m worth stocks as the outflow slowed down from $32m the earlier week. Much of the foreign selling was concentrated in cement stocks ($5mn), oil-marketing companies ($4.8m) and the exploration (E&P) and production sector ($2.6m).

Foreigners also bought equity worth $9.5m in the banking sector. Among local participants, mutual funds were the biggest buyers ($19.2m), followed by individuals ($11m).

Pakistan Petroleum fell 8.82pc, Hub Power Company 5.01pc, Engro Corporation 3.99pc, Fauji Fertilisers 5.05pc and Searle 8.31pc, with a total negative contribution of 474 points.

In contrast, stocks which made aggregate positive contributions of 289 points included Indus Motors which rose 16pc, Pak Suzuki 20pc, Pakistan Tobacco 18.2pc, Pak Elektron 10pc and Millat Tractors 6.1pc.

Fertiliser stocks came under pressure, taking away 249 points from the index. The E&P sector followed with a negative contribution of 238 points as international oil prices fell by 3.54pc week-on-week. Cements also underperformed.

On the gaining side, automobiles did a fairly good job with an addition of 211 points to the index as investor confidence received a boost on bright corporate results.

Indus Motors came into the limelight on market talk of company introducing Fortuner in a diesel variant, while Pak Suzuki gained on the back of potential taxi and tractor schemes in the offing by the government. Other sectors that outperformed the broader market included tobacco, glass and auto-parts.

Major news during the week included a rise the country’s total liquid foreign exchange reserves to $21.2bn, a government announcement to set up Pakistan Infrastructure Bank with access to $1 billion, National Fertilizer Development Centre expecting 14.7pc increase in fertiliser off-take for the Kharif season, and Chinese firm winning Rs2.2bn contracts for the resettlement of the Dasu power project.

OUTLOOK: With the results season nearing its end, the market is expected to remain range-bound amid lack of triggers. Analysts believe that the month of May could be significant for the local equity market given official reclassification to the MSCI emerging market index on May 15.

It was thought to result in foreign flows which could lift both sentiments as well as aid trajectory of the KSE-100 index. With the budget announcement scheduled for the last week of May, investors would look out for the upcoming budget proposals, while the new leverage product is also awaited. Any pleasant surprise on that score could cheer up the market mood.

Published in Dawn, April 30th, 2017