KARACHI: The expectations of a grand rally following the budget, that decreed much of what Pakistan Stock Exchange had been clamouring for over the last four years, did not materialise. In the outgoing week, the KSE-100 index closed in the red in all four sessions wiping out 1,006 points (2.21 per cent) and closed at a 29-sessions low 44,537 points.

The bounties lavished in the budget were eclipsed by the investors’ fear over the political uncertainties emanating from the approaching deadlines for accountability court’s verdict on Sharif family, the appointment of caretaker government and the general elections. Some market participants also complained about the unaddressed issues like GIDC, CGT regime, and higher taxation on dividend income.

While the rising oil prices were ignored, the investors’ worries were exacerbated by the grim economic numbers, mainly the balance of payments, growth outlook by International Monetary weakened to 4.7pc for FY19 along with macroeconomic vulnerabilities and Asian Development Bank’s concerns over the debt burden of CPEC-led infrastructure projects on country’s weak financial structure.

Blood was splashed all across the stocks trading screen but banking took the brunt of the blow as the sector accounted for a loss of 458 points. Besides net selling of $8.3 million worth banking scrips by the foreign investors, a contributing factor that dented the sector was the Moody’s investor service latest credit outlook, characterised by the continuation of super tax on banks as a credit-negative event.

Other sectors that churned out losses included fertilisers at 106 points, oil and gas exploration companies 86 points, oil and gas marketing companies 65 points and textile 42 points. Stocks that turned out to be major laggards during the week included Habib Bank, lower by 220 points, United Bank 137 points, Engro Corporation 57 points, Oil and Gas Development Company 57 points and Pakistan Petroleum 48 points. On the flip side, minor positive contributions came from Mari Petroleum 15 points, Bank of Punjab (BOP) 15 points, Engro Fertilisers 9 points, DG Khan Cement 9 points and Fauji Cement 8 points.

Foreign buying in the outgoing week clocked in at $0.57m, which was mainly concentrated in fertiliser at $1.3m. On the domestic front, figures released by the National Clearing Company of Pakistan recorded major selling by insurance companies worth $4.3m, followed by broker proprietary trading $3.9m and banks/DFIs $3.8m. Domestic buying was largely executed by investors grouped as “other organisations” at $9.1m and by companies $6.4m.

The average daily volume settled at 166m shares, down 1.56pc over the earlier week while the traded value clocked in at $54.9m, lower by 22pc. Leaders included BOP at 135m shares, followed by Lotte Chemical 57m shares, Unity Foods 38m shares, Shabbir Tiles and Ceramics 20m shares and Engro Polymer and Chemical 16m shares.

News flow included average consumer price inflation rising to 3.7pc in Apr’18 due to increase in oil prices and utility tariffs; petrol rates higher by Rs1.70 per litre for May; federal excise duty on cement to be applicable soon; State Bank’s foreign exchange reserves going by $593m; Atlas Honda declaring plans to invest Rs1.7bn in expanding production capacity; Amreli Steels rolling out production from its Dhabeji plant; Siddiqsons Tinplate’s announcement to set up 200,000 tonnes per annum cold rolled coil capacity and the prime minister backing sale of K-Electric to Shanghai Electric Power.

Published in Dawn, May 6th, 2018