KARACHI: The stock market stood badly battered for the second successive week as the political and economic headwinds continued to weigh heavily on the investors’ minds. The KSE-100 index plunged 942 points (2.1 per cent) to settle at an eight-week low of 43,595 points.

The continuing concerns on the macroeconomic indicators, disputes on budget proposals, the politically charged atmosphere together with the deterioration in ties with the US, made a perfect recipe for elevating investors’ anxiety where most decided to sell their positions and opt the risk-off approach.

Three heavyweight stocks were the major contributors to the market downside: Habib Bank shedding 3.28pc of its value, United Bank down 4.25pc and Lucky Cement 4.43pc, together wiping off 242 points from the index.

Trading activity was subdued with volume and value of traded shares remaining almost flat. The average traded volume edged higher by 1pc over the previous week to 167 million shares while the average traded value clawed up to Rs6.5 billion. The leaders were First Dawood Investment Bank at 48m shares, Unity Foods 46m shares, Sui Southern Gas 36m shares, Fauji Cement 35m shares and Bank of Punjab 33m shares.

Amongst key listed sectors, oil and gas exploration stood out as the only heavyweight sector which closed in the green zone with an increase of 1.5pc, on higher crude oil prices. Brent rallied 3.4pc over the week as President Donald Trump announced withdrawal from the Iran nuclear deal and new sanctions on the country, which led to concerns that the global oil supply could be squeezed. Pakistan Petroleum and Pakistan Oilfields gained 2.9pc and 2.7pc, respectively, cumulatively contributing 100 points to the benchmark index.

Other than that, almost all key sectors remained under pressure such as fertilisers, lower by 0.6pc, oil and gas marketing shed 2.3pc, automobiles 3pc and cement 3.7pc. Cement stocks grabbed the spotlight amidst rumours that manufacturers had in principal agreed to increase prices by Rs15-20 per bag in the Northern zone, to pass on the impact of surging coal prices. That did not prevent the sector from erasing 137 points.

Banks also continued to bear the beating on imposition of 7pc additional effective super tax, change in tax calculation methodology on provisioning for foreign non-performing loans and week earnings outlook. Although the Finance Minister assured the sector that the ministry will consider rationalising taxes, foreign investors were not impressed and continued to ditch several big-bank stocks.

During the week, foreigners sold equity worth net $4.1m. The figures were arrived at after including net foreign off-market buying of $9m shares in Abbot Laboratories. Among the participants, mutual funds mopped up shares of $4.2m and insurance companies followed suit with buying valued at $3.7m whereas individuals sold equity of $1.9m.

Major news flow during the week included trade deficit widening to $30.245bn (up 14pc year-on-year) in 10MFY18, government decision to issue floating rate Pakistan Investment Bonds for the first time to raise Rs150bn and foreign exchange reserves plunging by 2.4pc to $17.3bn.

In other developments, fertiliser manufacturers raised urea prices by Rs100 per 50kg bag, adjusting for recent budgetary measures, cement despatches in Apr’18 spiked by 17.46pc to reach at 4.237m tonnes and the Supreme Court announced its verdict in Katas Raj Temple case, directing domestic cement producers to find alternative water source.

Published in Dawn, May 13th, 2018