KARACHI: The bears were on a rampage throughout the previous week on the stock market with the KSE-100 index witnessing a loss of whopping 2,043 points (4.7 per cent) to close at 41,637. Turning out to be one of the worst weeks this calendar year, the market spoilt the festive mood of investors who returned to trading after Eid holidays.

Each trading day brought with it more depressing news which went to intensify panic-selling mainly by the individuals and some institutional investors. Domestic macroeconomic headwinds, the Moody’s downgrade of Pakistan’s outlook to ‘negative’ from ‘stable’ citing precarious external accounts scenario and depleting foreign exchange reserve, persistent selling pressure from foreign investors, alarming current account numbers (with trade deficit at an all-time high of $34bn), FDI down by 1.3pc year-on-year in 11MFY18 and further pressure on the local currency jolted investor sentiments.

Adding to it the local political uncertainty and the US Ambassador Alice Wells statement to put Pakistan on notice until it ended all local terrorist sanctuaries, went to create a perfect recipe for disaster. The market was exposed also to a range of exogenous factors such as escalating tension of trade war between US and China, new round of tariffs imposed on US by its European allies and volatile international oil prices.

However, with the conclusion of the month of Ramazan and trading returning to normal time, the average daily traded volume ramped up by 29pc over the preceding week to 170m shares. Volume leaders were KE with 77m shares, Power Cement 42m, TRG 40m, Lotte Chemical 32m and Summit Bank 31m shares. The average traded value declined by 15pc week-on-week.

Index heavyweight sectors including banking and oil & gas exploration stood badly bruised in the week, resulting in eroding 666 and 356 points, respectively from the index.

Cement, oil and gas marketing and auto also remained under pressure as investors worried over the negative implication of currency devaluation on these sectors.

Foreign outflows intensified during the week with net sale of equity worth $24.5m against $4.4m the week before.

Amongst local investors, insurance companies were net buyers of $15.2m and ‘Companies’ $14.60m, whereas mutual funds were net sellers of shares valued at $6m.

Sectors that were led underperformers during the week included commercial banks, oil and gas exploration companies, cement, oil and gas marketing companies and automobile assemblers.

Going forward, Financial Action Task Force (FATF) meeting in Paris scheduled between June 24-29 over Pakistan’s fate, will be the major factor for the future market direction.

Published in Dawn, June 24th, 2018