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KARACHI: One of the longest rallies at the Pakistan Stock Exchange (PSX) that saw the KSE-100 index record stellar gains of 14 per cent in 13 straight sessions was snapped during the outgoing week as the heat on political front forced investors to turn to profit booking.

The benchmark index ceded 697 points in the last two sessions and yet managed to close the week with an addition of 410 points (0.98pc) at 42,934 points.

Strained Pak-US relationship followed by increasing noise on the domestic political front remained the major factors that forced investors to flee. The bourse started the week with bullish sentiments influenced by increased interest of foreigners who swooped to pick blue chips at attractive valuations. Investors’ worries over the political uncertainty fueled by the call of public protests by Pakistan Awami Tehreek (PAT) chief Tahirul Qadri from Jan 17, with Imran Khan’s Pakistan Tehreek-i-Insaf (PTI) putting weight behind him provided the market good reason to take correction.

Foreign investors remained aggressive net buyers during all ten trading sessions of the ongoing year, their interest triggered by depreciation of the rupee against the dollar and attractive valuations. Foreigners bought $26 million worth of shares during the week in the lead of inflow of dollars from foreign corporates amounting to $22m. Local investors remained net sellers of shares valued at $26.41m, mainly contributed by banks, at $18.48m, others $7.78m and companies $7.47m. Individuals and brokers were the net buyers of equity worth $11.41m and $2.02m respectively.

Volumes remained healthy in all five trading sessions averaging 276m shares, up 30pc over the earlier week with volume leaders being WorldCall Telecom, at 101m shares, TRG Pakistan 91m, Azgard Nine 63m, Sui Southern Gas 61m and Pak Elektron 59m. Average traded value jumped 43pc to reach $110m depicting major activity in main board stocks.

Fertiliser sector remained in the lime light, up 1.4pc, anticipating a new fertilizer policy expected to benefit the industry. In addition, multi-utilities, up 15pc, and engineering 3.1pc, also caught investors’ attention post approval of third Liquefied Natural Gas pipeline by the government. Gas distribution companies Sui Northern Gas and Sui Southern Gas rose by 18.6pc and 6.7pc respectively, over the week whereas NEPRA’s resistance to revise Karachi Electric’s multiyear tariff dragged the stock down by 4.96pc.

Leading gainers for the week included Habib Bank, increasing by 0.7pc, Colgate-Palmolive Pakistan 5pc, Pakistan Oilfields 0.7pc, Pakistan International Bulk Terminal Ltd 1.8pc and Fauji Fertiliser 0.3pc, adding 53 points to the index. On the other hand, Pakistan State Oil, down 3.9pc, D.G. Khan Cement 4.9pc, Oil and Gas Development Company 1.4pc, Engro Corporation 1.7pc and United Bank 1.1pc scrapped 159 points from the index. Performance leaders (of AKD universe) during the week were Fauji Fertiliser, up 7.02pc week-over-week, Fauji Fertiliser Bin Qasim 6.12pc, Habib Bank 4.82pc, Attock Petroleum 3.65pc and Cherat Cement 2.94pc while laggards included National Bank, contracting by 5.93pc, Karachi Electric 4.96pc, D.G. Khan Cement 4.43pc, Amreli Steels 4.42pc and Kot Addu Power Company 3.33pc.

News flow for the week included: World Bank forecast of Pakistan’s GDP at 5.5pc; liquid foreign exchange reserves held by the State Bank of Pakistan (SBP) dropping by $134m to $13.9bn taking total reserves to $20bn, Economic Coordination Committee approving a waiver of sales tax and customs duty on the import of cotton and trade deficit widening to $17.96bn in July-December, up 24.5pc year-on-year. Remittance inflows stood at $9.7bn in the same period, higher by 2.5pc, auto sales in 2017 registered 18.7pc growth with government mulling to levy further duties on import of luxury items while considering to slash power tariffs for textile firms.

Outlook: Market pundits put political happenings ahead of other factors that could determine the direction of the market in the upcoming week. Protests by PAT and PTI would be closely watched before investors start to shift their focus on result season and monetary policy announcement expected by the month end. Some analysts reckoned that sustained foreign buying may also garner investors’ interest.

Published in Dawn, January 14th, 2018