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KARACHI: The outgoing week saw a bearish takeover as index went on to lose 846 points (2 per cent) week-on-week closing at 41,742.

Investors were reluctant to participate, awaiting key decisions from the new government. As a result, the index bled for four consecutive sessions in the outgoing week.

Top losers were led by cement scrips, dragging the index down by 6.6pc, followed by power sector which fell by 4.1pc. Fertiliser sector took third spot after reports claimed that the government may ask producers to pass on their Rs10 billion windfall profits to the consumers.

The incumbent government held its first economic coordination committee (ECC) meeting under the chairmanship of Finance Minister Asad Umar with gas prices, fertiliser inventory and the resolution of circular debt being key issues. However, decisions were delayed until the next ECC meeting.

Foreigners continued to remain net sellers with an outflow of $10 million with overseas corporates in the lead. Outflow was noted mainly in the banking at $3.4m, oil and gas marketing $1.16 and exploration $6.6m. Amongst local investors, insurance remained the leading player, buying $8.38m from the market.

Foreigners offloaded their position in the market, closing the week in red with bulk selling reported in the banking at $3.8m and oil and gas exploration $6.3m sectors.

For the outgoing week, the main contribution to the index downside came from Lucky Cement, lower by 6.43pc, Fauji Fertiliser 5.97pc, Engro Corporation 3.62pc and Hub Power Company 5.06pc. On the flip side, Pakistan Tobacco was higher 9.18pc, Phillip Morris 13.11pc, adding 80 points.

On the macro front, Pakistan booked highest ever budget deficit of Rs2.26 trillion in the outgoing fiscal year, pushing the country deeper into a debt abyss. The 15pc year-on-year rise in the deficit came about after previous government failed to exercise fiscal discipline.

Indus Motor Company on Tuesday approved to invest Rs3.3 billion in a bid to increase annual production to 76,000 units, and debottleneck production facility.

Index participation was visibly high with average daily volume traded rising to 177.48m shares from 131.72m during the corresponding week with average value traded jumping by 38.6pc to 60.98m. Engro Polymer and Chemicals took the lead with 53.97m shares, followed by Nimir Resins at 51.23m shares, Agritech 43.86m shares and Siddiqsons Tin Plate 42.38m shares.

Looking forward, the week will begin with the awaited ECC meeting during which the government is likely to make key decisions on circular debt, increase in gas prices and fertiliser inventory challenges. Investors are not betting on any quick and easy resolution on the issue of circular debt immediately, however, the proposed increase of 30pc in gas prices for industries is bound to affect key sectors ie chemicals and glass.

Published in Dawn, September 2nd, 2018