KARACHI: The stock market took a positive start in the outgoing week but the investors’ sentiments soon deteriorated on a host of disconcerting issues, which sparked a selling spree that spanned the last four trading sessions.

During the week, the KSE-100 index was dragged down by 729 points (1.7 per cent) to close at 43,011.

Stocks sank as investors’ sentiments dampened over concerns expressed by the International Monetary Fund in its first post-programme monitoring over the country’s economic outlook going forward, spewing primarily from despondent projections of the current account deficit and budget deficit of the country.

To add insult to injury, the Standard Chartered Bank also downgraded Pakistan’s credit outlook. The State Bank of Pakistan recorded gross reserves at $18.3 billion, representing a 32-month low.

Investors also scrambled to take profit as they peered at dark clouds on the political horizon. The worries were exacerbated on the National Accountability Bureau’s initiation of inquiries against mainstream political faces and listed companies.

Contrary to expectations, conclusion of the Senate elections over the weekend could not spur market to action as other problems weighed heavily on investors’ minds.

The benchmark index floated in the range of 42,861 to 44,074 during the week, witnessing volatility of more than 1,200 points. Trading activity remained dull with the average traded volume declining by 16pc to 152m shares while the average traded value fell by 19pc to $60m.

Foreign outflows continued during the week with net foreign sales at $3.9m, mainly concentrated in commercial banks, at $2.6m and exploration and production 1.1m. On the domestic front, local selling was largely executed by mutual funds worth $6.6m and companies $4.7m. Major buying was reported by insurance companies, valuing at 48.2m, and banks $4m.

Sector-wise, major laggards were commercial banks, decreasing by 180 points, fertiliser 120 points, cement 101 points, oil and gas exploration companies 55 points and oil and gas marketing companies 52 points. Minor positive contributions came from chemical and leather and tanneries sectors with 10 points each.

Profit-taking was seen mainly in Habib Bank, down 83 points, Engro Corporation 80 points, MCB Bank 56 points, TRG Pakistan 31 points and DG Khan Cement 29 points. Support was provided by Bank Alfalah, up 18 points, Colgate-Palmolive Pakistan 14 points and Bata Pakistan 10 points. AKD Universe saw Cherat Cement growing by 6.84pc week-on-week, Engro Foods 5.53pc, Fauji Cement 5.25pc, and Hascol Petroleum 4.58pc while the decliners included Bank Alfalah, shrinking by 3.22pc, Amreli Steels 1.89pc and Pak Suzuki 0.01pc.

Oil and gas sector eroded 127 points from index in four sessions of the week due to declining crude oil prices; however, on the last trading session (Friday) E&P stocks recovered to add 72 points, as Pakistan Petroleum Limited notified exchange regarding its new discovery in Adhi block.

Cement stocks, which were the investors’ favourites the week before, fell 2pc over the earlier week as profit-taking was witnessed post increase in the local cement prices in north region by Rs10 per bag during the week. Amreli Steels was up 1.9pc, likely led by upcoming expansion starting operations by the month end and market buzz of possible increase in re-bars prices.

Key news flow during the week were US President Trump’s announcement of tariff imposition on steel imports to the country, raising investors’ concerns over impact of the development on local companies.

Engineering sector declined by 2.4pc, while autos inched up by 0.1pc. Cement sector registered 11pc year-on-year growth in despatches in February and Economic Coordination Committee approved a plan to obtain Rs80bn in bank loans to retire part of the power sector’s longstanding circular debt.

Published in Dawn, March 11th, 2018