KARACHI: The outgoing week was cut short by a public holiday and in the four sessions of trading, the KSE-100 index fell 791 points (1.9 per cent) over the previous week to settle at 40,869.

The week otherwise remained eventful. On the positive side, Pakistan received $1 billion as the first tranche of financial assistance from Saudi Arabia, helping foreign exchange reserves rise to $8.3bn, which was the first time in 13 weeks that they managed to climb over the earlier week.

But the positivity was overshadowed by stalled negotiations with the International Monetary Fund due to disagreements over the terms of bailout package. The government has extended talks with the lender and expects the final deal to be reached by mid of Jan’19. Finance Minister Asad Umar calmed the countrymen assuring that alternative arrangements were in place to address immediate economic needs.

Further pressure was also felt on the last trading day due to the law and order situation, following attacks on the Chinese Consulate in Karachi and blasts in KP. The local bourse also took cue from Asian markets in general, which depicted a jittery performance during the week amid escalating tensions between US and China, and increasing uncertainties surrounding Brexit.

The prime minister’s Malaysia visit remained largely a non-event for the market but the dip in international oil prices may enable the government to manoeuvre some room for an emboldened stance on the IMF package.

Foreign selling during the week stood at $11.6 million, which marked the 29th consecutive week of foreign outflows. Overseas investors’ sell-off was witnessed in cement at $3.8m and exploration and production $3.6m.

Among the domestic participants, the bulk of foreign selling was absorbed by insurance companies which bought stocks of $8m and banks with net buying $4.1m worth shares. Companies and non-banking finance sold off equity of $3m and $1m, respectively. Market activity remained dull with average daily traded volume shrinking by 26pc to 157m shares and the average traded value plunging 26pc to $56m.

Sector-wise, exploration and production was the major laggard, which contributed 329 points to the Index decline. It was attributed to the slump in international oil prices which fell to their lowest in a year, owing to concerns regarding oil supply glut.

Commercial banks were the second worst performers, chipping away 278 points.

In the week ahead, market performance remains contingent on clarity over several principal matters, the foremost being economic package from China. The announcement of the monetary policy on Nov 30 with consensus expectations of hike by 100 basis points and the impact of the MSCI rebalancing on the same day could determine market direction.

Published in Dawn, November 25th, 2018