KARACHI: The five-day trading week was cut short by a holiday on Thursday. Despite sharp drop in international oil prices, the KSE-100 index managed to break its two-week losing streak and recover 562 points (1.2 per cent) to settle at 48,971 points on Friday.

In the absence of triggers and no noticeable progress on the introduction of a new leverage product the trading on most sessions was choppy. The possible outcome of the Panama Papers case weighed heavily on investors’ mind.

Average daily volumes showed improvement of 39pc week-on-week to 258 million shares. However, the volumes remained well below FY17TD average daily volumes of 376m. Activity, however, remained centered in small-cap stocks as average daily traded value fell 8pc week-on-week.

Foreign investors seized the opportunity to accumulate stocks at low valuations and bought shares worth $3.47m during the week against sell-off valued at $11.08m in the previous week. Bigger inflows were noticed in fertilisers $2.28m; commercial banks $0.36m and oil marketing companies $2.7m, while major selling was seen in cements amounting to $4.4m. Among local participants, individuals and Development Finance Institutions (DFIs) were major sellers.

Topline Securities pointed out that the steel stocks blipped on investor’s radar with ASL standing out to return 21pc week-on-week and hitting its upper circuit for four sessions in a row. Pharmaceuticals outperformed with the sector’s market capitalisation growing 6.5pc, while cement, fertiliser and E&P’s gained between 0.8-1.2pc cent.

Among stocks, Searle up 9.7pc and SNGPL 6.9pc adding 117 points to the index. Other gainers included: Engro, OGDC and MCB contributing 212 points. AGTL rose 6.42pc MEBL 5.03pc and EFERT 4.82pc.

Laggards for the week were UBL which fell 1.8pc, KEL 5.2pc and Lucky Cement 0.5pc, eroding 77 points from the index. ICI down 2.68pc and APL 0.83pc also made poor showing. The significant event during the week was the announcement of a multi-year tariff for KEL by Nepra. While ambiguities relating to the tariff remained, the scrip emerged as the volume leader albeit showing decline of 5.2pc.

During the week, KEL slipped to its lowest intraday level at Rs8.16 since August 2016 along with above average volume of 35m shares as compared to preceding four weeks’ average of 20m shares.

Key news during the week included: PSX processing claims against defaulting broker; FBR planning to develop common reporting platform for collection; current account deficit surging by 120pc. Fauji Fertiliser Bin Qasim (FFBL) notified the PSX that its 118MW coal power plant would commence operations from end of April; current account deficit was up 121pc during first eight months of this fiscal year to $5.47bn. HBL announcing plans to sell its Kenyan branches in exchange for 4.18pc additional stake (13.28m shares) in Diamond Trust Bank Kenya and PSMC considering shelving its planned $450m investment in spare parts plant and capacity expansion.

OUTLOOK: The State Bank of Pakistan’s decision to keep policy rate unchanged at 5.75pc is expected to be neutral for the market. The political chatter over the outcome of Panama Papers case could dominate investor sentiments, which had the tidings of dissuading investors from taking fresh positions. Any development on a new leverage product could ignite investor interest in trading in equities, resulting in driving volumes.

However, some bullish market participants think that the SECP-broker issue and the worries over the Panamagate have subsided and the market could pick up momentum next week. The about to begin March-end results season will provide further impetus to the market.

Published in Dawn, March 26th, 2017