KARACHI: Stocks snapped three-week winning streak triggered by the smooth transition of power to the caretaker government that led to create confidence in the minds of the investors over the holding of timely elections on July 25.

But in the outgoing week, some other developments put the political issues on the back-burner as KSE-100 index declined by 267 points (0.61 per cent) over the preceding week to close at 43,681 points.

There were lack of triggers in the last week of Ramazan as faithfuls ignored market in quest to seek divine blessings, a soaring trade deficit to all-time high of $33.89 billion in the 11 months of the year, up 13.4pc over the earlier year, and increase in local petroleum product prices were the major culprits that pushed the market to present a dull performance.

The crowning blow to investors’ sentiments was the ‘hawkish’ stance by the caretaker Finance Minister Dr.Shamshad Akhtar to devalue the rupee by 4.7pc against the dollar, terming it as market-based reflecting the country’s external account balance due to a large trade deficit and depleting reserves. The initiative marked the third round of depreciation since last December, which most market participants agreed was necessary but stalled for a long time.

Meanwhile, foreign investors sold off equity for the sixth consecutive week though outflows slowed down during the outgoing week to $4.45 million, compared to the foreign fund managers offloading of stocks worth $29.55m in the week before. Major foreign divestment was witnessed in cement at $3.59m and fertiliser at $2.65m. Among the local participants, companies accumulated stocks valued at $10.57m, followed by mutual funds at $2.12m.

The average daily traded volume declined by 28.27pc over the preceding week to 131.84m shares, with leading contributions from Bank of Punjab with 61.89m shares, Pak Elektron 25.49m shares, Lotte Chemical 24.78m shares,Fauji Cement 20.97m shares and K-Electric 20.85m shares. The average traded value plunged 31pc week-on-week to $54m.

Cements took brunt of the blow in the outgoing week with a loss of 237 points on account of international coal prices breaching $106 per tonne. The impact of the plunge in the rupee also reverberated across the market, where import-dependent sectors took a blow, including cements which fell by most points, followed by engineering shedding 54 points and automobile assemblers 45 points.

Other losers included commercial banks, lower by 61 points and cables and electrical goods 16 points. On the other hand, sectors providing support to the index included oil and gas exploration companies, increasing by 155 points due to it being a major beneficiary of the rupee depreciation and fertilisers 36 points.

Scrip-wise laggards during the week were Lucky Cement, decreasing by 98 points, MCB Bank 61 points, Habib Bank 55 points, DG Khan Cement 49 points and Dawood Hercules 34 points. Whereas scrips that displayed a positive return included Bank Al Habib, higher by 67 points, Engro Corporation 67 points and Oil and Gas Development Company 62 points.

With the conclusion of Ramazan and Eid holidays, next week commencing from Tuesday (Jun 19), the market is expected to remain range bound where investors could take direction from upcoming Opec meeting in Vienna on Jun 22 and 23. Pakistan’s action plan for the review by Financial Action Task Force in its plenary meeting, scheduled to take place in France from Jun 24-29 would also weigh on investors’ mind. Key triggers could also be positive response to the amnesty scheme and confidence over timely elections on July 25.

Published in Dawn, June 16th, 2018