KARACHI: Stock market witnessed more bleeding in the just concluded week which marked the seventh successive week of selling spree by investors who dumped stocks and sought the shelter of fixed income securities. The market has sunk 14 per cent in the seven weeks; one of the longest losing streaks in the last 17 years

In the outgoing week, the KSE-100 index plunged 1,550 points (4.5pc) marking the highest percentage loss in 30 weeks. The index closed at new three-year low 33,167 points.

The index suffered heavy losses at the start of the week as investors were spooked by the potentially harsh conditions that may be attached to the International Monetary Fund bailout package of $6 billion, which robbed them of the joy of successful conclusion of the staff level talks with the International lending agency.

The market briefly rallied 1.2pc in the third trading session, as news regarding Kekra-1 well nearing its conclusion surfaced as a glimmer of hope in an otherwise dull market, recouping some of earlier losses.

Traders watched with relief as Pakistan was able to stave off the downgrade by MSCI to Frontier Market. A bit of excitement was created mid-week on positive news relating to Kekra-1 and the announcement of Amnesty Scheme.

But it provided to be short-lived as investors worried over the Monetary Policy announcement scheduled for May 20, where rumours of pre-emptive 100-200 basis points interest rate hike started doing rounds.

The hardest blow during the week was the surprise devaluation of the Rupee by 3.6pc which aggravated the bearish sentiments.

Foreign investors continued their buying spree adding $8.2 million worth stocks to their portfolio, against purchases of net $10.4m the preceding week. Foreign buying was witnessed in commercial banks of $8.2m and cement $5.6m. On the domestic front, major selling was reported by mutual funds worth 19.1m, followed by insurance companies selling of stocks valued at $2.4m.

Average daily volumes during the week clocked in at 107m shares, representing increase of 46pc over the preceding week, while the average traded valued clocked in at $29m, up 29pc week-on-week.

Sector-wise most produced negative returns in the lead of fertilisers which contributed 335 points to the index downside, followed by cements down 237 points, commercial banks 229 points, oil and gas marketing companies 219 points) and pharmaceuticals 92 points). On the flipside, oil and gas exploration sector was among the few sectors that closed in green with gains of 83 points, on the back of optimism regarding Kekra-I well development resuming once again.

Scrip-wise, major laggards were Fauji Foods down 25pc, Kohat Cement 22pc and International Industries 23pc while Pakistan Petroleum beat the bearish trend and gained 6pc, which represented the highest returns by a stock for the week.

Going forward, most market gurus expect the bearish sentiments and a range bound trend to continue, given the uncertainty over the rupee devaluation and the macro-economic concerns.

The monetary policy announcement scheduled for May 20 and news-flow regarding budgetary measures would provide direction to the market.

Read: Drilling off Karachi coast stopped as no reserves found

Meanwhile, any positive news in relation to success at Kekra-1 well could change the otherwise gloomy outlook.

Published in Dawn, May 19th, 2019