KARACHI: Stocks endured another week of strong sell-off with the KSE-100 index hammered by 812 points (1.76 per cent) to close at 45,259.34. Added to the earlier week losses of 1.24pc, the market has suffered a fall of 3pc in two weeks.

Investors were spooked by the heightening political noise, deteriorating economic numbers along with uncertainty on budgetary expectations as the incumbent government’s tenure ends on May 31, just 34 days ahead of the date of the budget. The results announcement season also did not produce effective pleasant surprises to boost their sentiments.

All major sectors came under pressure on specific issues. The heavyweight stock Oil and Gas Development Company (OGDC) kept investors on their toes after an off-market sale of a big block by a foreign investor at 2pc discount and rumours made rounds of another big block coming up for sale.

The banking sector took beating after United Bank Ltd (UBL) unveiled lower than expected earnings in its quarterly accounts. UBL and Habib Bank Ltd (HBL) went down by 4pc and 6pc possibly in anticipation of further provision charge and one time pension costs. Banking stocks also fell partly due to a circular issued by the State Bank of Pakistan, mandating strategically important banks to maintain higher loss absorbency capital surcharge in the form of additional Common Equity Tier 1. The weakness in heavyweight banking stocks sent most other banks scurrying down.

Stocks in the cement sector underperformed owing to rumours of a Rs15 per bag decline in cement prices in the northern region. Pakistan Oilfields and Mari Petroleum also dampened sentiments as they posted lower than expected earnings. Under the circumstances, positive news of soaring oil prices failed to rekindle investors’ interest.

Sector-wise negative contribution came from commercial banks, lower by 265 points, cement 200 points, oil and gas exploration companies 197 points, fertiliser 67 points and engineering 45 points.

Stocks that stood out as major laggards were HBL, decreasing by 160 points, OGDC 155 points, UBL 89 points, Lucky Cement 84 points and Fauji Fertiliser 71 points. Meanwhile major positive contribution came from Pakistan Tobacco, increasing by 50 points, Colgate-Palmolive 45 points, Abbott Pakistan 25 points, Bank Alfalah (BAFL) 25 points and Dawood Hercules 24 points.

Leading the week’s performance, according to AKD universe, were BAFL, up 4.2pc week-on-week, Attock Petroleum 3.17pc, Engro Fertilisers 2.17pc, Indus Motors 1.7pc and Kot Addu Power 1.1pc while decliners included Fauji Fertiliser Bin Qasim, down 10.56pc, DG Khan Cement 8.38pc, OGDC 6.57pc, HBL 5.61pc and Fauji Cement (FCCL) 5.4pc.

Foreign selling intensified in the week with net outflow of $42 million compared to net foreign purchases of stocks worth $17m the preceding week. Foreigners continued to offload their holding with majority of the selling coming from OGDC’s share placement deal of 54m shares at Rs164 per share, therefore their sell-off was concentrated largely in E&P worth $46m followed by commercial banks $4m. On the domestic front, major buying was reported by mutual funds at $25m, followed by individuals with $15m of equity. Domestic selling was largely executed by companies of $3m worth stocks and insurance companies $2m.

The average daily volume declined 37pc over the preceding week to 155m shares while the value traded clocked in at $65m, down 19pc. The leaders were Engro Polymer at 52m shares, Lotte Chemical 46.39m shares, Unity Foods 45.08m shares, K-Electric 43.09m shares and FCCL 37.66m shares. Going forward, as the date of announcement of FY19 budget draws closer, any positive news on budgetary proposals is thought to act as a trigger and dictate the future trajectory of the market.

Published in Dawn, April 22nd, 2018