Stocks pare gains in volatile week

Published March 18, 2018
KARACHI: Stockbrokers are talking to their clients on phone. The benchmark KSE 100-index closed the week with a rise of 351 points to 43,363.
KARACHI: Stockbrokers are talking to their clients on phone. The benchmark KSE 100-index closed the week with a rise of 351 points to 43,363.

KARACHI: The stock market remained volatile for most part of the week amid lack of triggers, continuing political noise, depressing macroeconomic numbers and a murky outlook. The KSE-100 index was range-bound, closing with pared gains of 351.94 points (0.82 per cent) at 43,363.

Following the fall of 204 points in the preceding four sessions in a row, the KSE-100 Index staged a grand rally of 606 points in the first two sessions of the outgoing week. However, the positive momentum could not be sustained as the index succumbed to profit taking in the later part of the week.

The positive start to the week was also attributed to investors’ enthusiasm over peaceful election of Senate chairman and deputy chairman. Sector related positive news flow kept investor interest alive during the early half of the week.

However, concerns regarding weakening macro environment include depleting reserves and mounting external debt re-emerged post-programme IMF monitoring report. The International Monetary Fund (IMF) also recommended continuation of exchange rate flexibility and further monetary policy tightening to address the issues. Investors took cautious approach as further devaluation of Pak rupee seemed to be on the cards, in order to restrict Current Account Deficit.

Foreign investors sold stocks worth $10.46 million in the outgoing week where major outflow was seen in the banking, oil marketing, technology, and communications sectors. However, some respite came in from oil, gas and power sectors. Among local investors, companies and mutual funds bought shares worth $2.4m and $3.8m, while individuals and banks were major sellers of stock valued at $5.3m and $2.1m.

Exploration and Production (E&P) sector was the main driver of the index, rising 2.8pc week-on-week (WoW) led by an increase in oil prices. Other sector contributing to the index upside included commercial banks contributing 57 points to the index gain, followed by OMCs 33 points and tobacco 29 points. FTSE’s semi-annual rebalancing came into effect as of Friday’s close, through which the index provider removed Thal Limited and Pakistan Telecommunication Limited (PTC) from its global equity.

Average daily traded volumes improved by 15pc over the preceding week to 175m shares. Average traded value declined by 9pc to $55m as investors’ interest was mainly concentrated in second tier stocks. Lotte Chemical with 100.1m shares, Nimr Resins 55.3m shares, Pak Elektron Ltd 36.5m shares, Fauji Foods Ltd 33.5m shares and Azgard Nine Ltd 31.3m shares were volume leaders for the week. However, the chemical sector attained top position on volume leaders chart with cumulative volume of 209m shares due to improving margins of companies.

Leading gainers among stocks during the week were Pakistan Oilfields Ltd up 4.53pc, Oil and Gas development Company up 2.79pc, Pakistan Tobacco gained 5.51pc, Pakistan Petroleum Ltd gained 1.22pc and Bank AL Habib up 2.42pc, adding 197 points. On the flip side, Habib Bank Ltd lost 1.41pc, Millat Tractors Ltd was down 5.36pc and Fauji Fertilizer Company lost 1.74pc washed away 98 points.

Key news flow during the week included: government decision to present FY19 budget on April 27; Amnesty scheme to be announced this month; US renews GSP scheme for Pakistan; Miftah Ismail hinting at a potential relief package for stock market in the upcoming budget; the large-scale manufacturing (LSM) index increasing by 9.44pc year-on-year (YoY) for Jan 2018, taking cumulative growth to 6.33pc YoY for the seventh month of the ongoing fiscal year. Besides, foreign direct investment (FDI) in Pakistan rose 84.5pc in the eighth month of the current fiscal to $2 billion, according to SBP.

Government proposes to increase gas tariff by 5-7pc, generating additional revenue of Rs18bn to cover losses of the two gas utilities — Sui South and Sui Northern — with retrospective effect from 2012-13. Commerce division revealing that the country’s exports during Feb’18 grew by 16pcYoY to reach $1.9bn, while imports inched up 8.43pcYoY to $4.8bn, Pakistan Automotive Manufacturers Association (Pama) released auto numbers with industry sales rising 15pcYoY to 22,654 units in Feb’18. Foreign remittances numbers at $12.8bn received in 8MFY18 represented increase of 3pc over corresponding period of FY17.

Published in Dawn, March 18th, 2018

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