KARACHI: The stock market posted one of the worst weeks as the KSE-100 index lost 2,668 points, or 5.4 per cent, to close at 46,859.

This was for the first time in almost two months that the index settled below the 47,000 mark.

Market watchers mused that the index maybe on track to test 2017’s lowest intraday level of 46,048 points seen on April 19, a day before the announcement of Panama Papers case verdict. Average daily volumes rose 6.7pc week-on-week to 255 million shares while traded value decreased 8.4pc to $103m, likely due to bloated activity in right shares.

Foreign investors turned net sellers of $9.49m equity during the week against net purchases of $14.04m in the preceding week. Foreign selling was concentrated in exploration and production companies ($6.6m), power ($2.9m) and fertilisers ($2.2m). Foreign buying of $1.8m was witnessed in cement stocks.

Among local participants insurance companies were the major buyers of $18.78m shares. Banks made net purchases of $5.98m and individuals $4.84m. On the other hand, mutual funds disposed of equity worth $9.98m and companies sold shares amounting to $6.45m.

The market is expected to remain jittery on political uncertainty, volatile international oil prices and foreign outflows

Sector-wise, the biggest decline was noted in oil and gas exploration companies (down 546 points), as international oil prices declined 3pc over the week and continuing disturbances in the Gulf. It was followed by fertiliser (down 384 points), commercial banks (down 304 points), oil and gas marketing companies (down 282 points) and cements (down 271 points).

The Oil and Gas Development Company shed the heaviest 229 points, followed by Pakistan Petroleum 159 points; Engro Corporation 153 points and Hub Power Company 129 points. Other major losers were Shell which dropped 13.78pc, Fauji Fertiliser Bin Qasim 9.83pc and Pakistan State Oil 9.4pc. The two meaningful gainers during the week were Habib Bank (up 30 points) and Pakistan Tobacco (up 12 points).

The key news flow during the week included Shanghai Electric’s re-affirmation to buy out 66.4pc shares in K-Electric; National Assembly passed the budget; foreign exchange reserves fell to 19-month low of $20.15bn; trade deficit widened to record $30bn; and the Pakistan Stock Exchange completed the book-building of its 20pc stake in an extended five-day period at the floor price of Rs28 per share.

OUTLOOK: Arif Habib Ltd said in its weekend report that the KSE-100 index is currently trading at a cheaper price-earnings ratio of 9.4 times compared to Asia-Pacific regional average of 13 times, offering twice better dividend yield at 5.2pc against the regional yield of 2.6pc.

However, the market is expected to remain jittery on political uncertainty, volatile international oil prices and the resumption of foreign outflows.

AKD Securities said the continued political noise from updates on the Panama Papers investigation is likely to keep investors on edge. “Sustainable recovery remains unlikely amid lack of triggers and shortened days in Ramazan ahead of Eid holidays,” the brokerage said.

BMA Capital Management believed that the previous week’s correction significantly opened up valuations that could act as a catalyst for the market, particularly retail investors, once political dust settled.

Published in Dawn, June 18th, 2017