KARACHI: In the outgoing week, the Pakistan stock market closed flat with a minor loss of 13 points at 40,2771. In an extremely volatile week marked by political uncertainty and concerns over the deteriorating macroeconomic indicators, the benchmark experienced wild swings.

The week started on a steep decline of 996 points on panic selling as the convicted former PM Nawaz Sharif announced his intention to return to the country and face the jail sentence. However, DG ISPR’s promising message regarding fulfilling their election duties in a non-political and impartial manner restored investors’ interest in the market. The creeping recovery over the next four sessions saw the index recoup the week opening losses. In the closing days, the market rallied in the lead of banking stocks due to anticipated increase in interest rates in the monetary policy announcement on July 14 and attractive valuations.

Foreigners continued to remain net sellers for the 10th consecutive week, with net outflow witnessed at $26.6 million. Foreign selling was seen in commercial banks at $13.7m and cement $6m. On the local front, mutual funds were net sellers of $9.5m worth equity.

The sell-off was absorbed by insurance companies which bought equity of $13.8m and individuals $10.7m. The average daily volume rose 41pc over the earlier week to 131m shares while the average daily traded value went higher by 18pc to Rs5.9 billion.

Fertilisers gained 40 points and chemicals 20 points to the index. Sectors that remained under pressure were led by cement, lower by 137 points, food and personal care products 76 points and oil and gas marketing companies 55 points.

Scrips that were leading gainers in the week included Habib Bank, increasing by 108 points, MCB Bank 72 points, Bank Al Habib 68 points, Bank Alfalah 47 points and Engro Corporation 41 points. On the other hand, decliners included Nestle Pakistan 73 points, DG Khan Cement 56 points, Dawood Hercules 39 points and Fauji Cement 35 points.

During the week, steel prices suffered as concerns regarding the trade war between China and USA escalated. International Steels, Amreli Steels, Mughal Steels and Ittefaq Steel declined. The cement sector continued to remain under pressure as coal prices touched $109 per tonne. Meanwhile, external account position worsened as the trade deficit clocked in at an all-time high of $37.7bn for FY18.

With the fears of postponement in elections dissipating as the date of July 25 nears, market gurus expect positivity to prevail at the market. Heavyweight banking sector is expected to lead any bullish tendency on the back of policy rate hike by 100bps to 7.5pc announced by the SBP on Saturday. However, the heating up of political atmosphere and growing concerns over the external account could keep any major upside in check.

News flow included foreign exchange reserves continued to drain as SBP’s reserves declined to $9.5bn. Urea sales were up 22pc in June. Fiscal deficit rose to 4.3pc of GDP in July-March, trade deficit hit record $37.67bn. Remittances reached $19.6bn in FY18, but the target was missed. Government borrowing jumped 58.5pc to Rs1.4 trillion in FY18 and public debt reached Rs23.7tr in 11 months.

Published in Dawn, July 15th, 2018