KARACHI: The Pakistan stock market struggled throughout the outgoing week to forge ahead in the absence of major triggers; concerns over the macroeconomic stability, dwindling reserves, uncertain political conditions as the Election Commission of Pakistan had withheld the results of two out of five national assembly seats of PM-in-waiting Imran Khan and weaker than expected mid-season corporate earnings by several companies.

All of that sent the market on a roller-coaster ride with investors tilted towards a “risk-off” outlook. The KSE-100 index managed to gain 337 points (0.70 per cent) and close at 42,842 points.

During the week, foreign investors dumped $38.6 million worth stocks, much more than their net selling of $14.6m worth shares during the earlier week. Foreign outflows were witnessed in exploration and production $13.8m and commercial banks $10.6m. The foreign sell-off was absorbed by insurance companies who bought stocks worth $16.7m followed by individuals buying shares valued at $10.8m and and mutual funds $10.4m.

Activity staggered with the average daily volume down 27pc over the preceding week to 208m shares and average traded value lower by 19pc. Leaders were Lotte Chemical at 70.4m shares, Pak Elektron 63.9m shares, Engro Polymer and Chemicals 43.6m shares and Fauji cement 41.4m shares.

Among the sectors, cement remained the major index driver contributing 256 points as market rejoiced weak coal price outlook. Other gaining sectors included oil and gas marketing companies 60 points, auto assemblers 57 points, fertiliser 38 points and oil and gas exploration companies 36 points.

On the other hand, Banks took away 69 points from the index on concerns over banking sector earnings outlook. Among stocks, major gainers were Lucky Cement, up 7.15pc, Engro Corporation 2.92pc and Indus Motor Company 12.22pc which together added 212 points to the index.

Going forward, analysts said that corporate earnings are expected to continue to drive investor sentiments as Pakistan State Oil, Engro Corporation, Attock Petroleum, Pakistan Oilfields, International Steels are to announce results in the upcoming week. Additionally, the shorter trading week (off on Tuesday due to independence day) in the run-up to Eidul Azha may lift volume, raising individual investor participation in retail favourites.

Commencement of the National Assembly and provincial legislatures, coupled with formation of Government at the centre should give wider direction to investor expectations. Another market watcher pointed out that the first session of the assembly has been called on Aug 13, followed by Imran Khan likely taking oath as the prime minister on Aug 18. While this may keep the spirits high, reality check should soon follow as the PTI-led government prepares itself to tackle the growing twin deficits.

Key news flow driving sentiments in the outgoing week included: Pakistan planning to borrow more than $4 billion from the Saudi-backed Islamic Development Bank as part of its attempts to restore dangerously low stocks of foreign currency and Economic Intelligence Unit commenting that the country was unlikely to get bailout from the International Monetary Fund due to political resistance from both US and China.

Published in Dawn, August 12th, 2018