KARACHI: The bears switched positions with the bulls in the outgoing week after a prolonged period of rally that had seen the KSE-100 index gain 15.2pc, recovering all of the losses suffered in the FY18. The index retreated 566 points (1.21pc) in the week ended Friday to close at 46,072.

The euphoria over the amnesty scheme quickly died down as investors’ remained unconvinced of a major inflow. On top of it, the rejection of the scheme by major political parties put question mark on the endorsement by the parliament. Financial Action Task Force and International Monetary Fund raising concerns over the same also dampened investors’ enthusiasm. Analysts also thought that the gains resulting from it were already incorporated in the market the week earlier. Other disconcerting issues occupying investors’ minds were the hearings of key political cases in the Supreme Court, culminating on Friday with the verdict of life-time ban on former Prime Minister Nawaz Sharif on holding public office and the uncertainties surrounding the upcoming federal budget.

The market focus also shifted to the deteriorating macroeconomic environment. Foreign exchange reserves posted another decline, recording a consistent drop since December 2017. The latest blow in this regard came from Asian Development Bank which now projects balance of payment constraints to slow down Pakistan’s GDP growth to 5.1pc in FY19, from a projected rate of 5.6pc in FY18.

The redeeming factor in the outgoing week was the major increase in foreign buying amounting to $17.5 million, taking the 2018 to-date net inflows at $52.2m; the foreigners had bought stocks worth $3.6m the week before. While the local participants jettisoned the banking stocks, purchases of foreign funds were concentrated in the sector with net buying of $5.1m. On the domestic front, buying was largely executed by individuals at $11.9m and mutual funds at $6.6m. On the flip side, companies sold shares valued at $22m.

Banking stocks, which were the lead gainers following the declaration of amnesty scheme, saw the largest sell-off during the outgoing week, wiping off 372 points from the index, followed by cements at 185 points.

Othe the other hand, fertiliser sector added 72 points and stood out as the largest contributor to market gain during the week. Fauji Fertiliser (FFC) and Dawood Hercules rallied on rumours of favourable regulatory decisions on Government Infrastructure Development Cess (GIDC – cess/surcharge on gas), subsidy and urea prices. Oil and gas exploration companies added 35 points to the index as a result of average increase in oil prices by 4pc over the week. Other gaining sectors included auto, higher by 1.7pc, insurance 1.4pc and oil and gas exploration 0.1pc.

The volume subsided 4.6pc over the week to 247m shares while the value traded clocked in 30pc to $80.3m, indicating increased interest of punters in small cap stocks.

Outperformers of the AKD universe included FFC, up 3.47pc week-on-week, K-Electric 2.89pc, Fauji Fertiliser Bin Qasim 2.04pc, Pakistan Petroleum 0.90pc and Engro Fertilisers 0.88pc while the laggards were Kot Addu Power, down 8.07pc, Fauji Cement 5.19pc, DG Khan Cement 4.65pc, Habib Bank 4.48pc and Cherat Cement 4.37pc.

Key news flow during the week pertained to Moody’s positive comments on upcoming foreign assets amnesty scheme, power sector receivables up by 10pc to Rs805 billion since June 2017, auto sales for Mar 2018 higher by 9pc year-on-year, but down 1pc month-on-month, remittances recording 5pc yearly and 22pc monthly growth at $1.77bn during March 2018.

Published in Dawn, April 15th, 2018