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KARACHI: The stock market remained volatile during the outgoing week as investors bought and sold on the hope and apprehensions underpinned by news flow on several major issues confronting the market.

The KSE-100 index gained 117 points (0.3 per cent) and settled at 38,649 at the end of the week after making a high and a low of 38,965 and 38,129 points, respectively.

The market took a dismal start sinking by 403 points on the first day of the week as expectations of a rate hike in the SBP monetary policy review due at the end of the week, brought pressure on leveraged sectors such as cements and steel.

Investors also were sidelined after news contradicting the major discovery of offshore oil and gas reserves. However, the situation was redressed by the visit of IMF team that seemed to show flexibility on economic benchmarks paving the way for a bailout package, which the finance minister said could materialise by mid-May. Moreover, the receipt of $2.2bn loan from China raised the foreign exchange reserves to $17bn, providing some relief to the investors worried over the economic malaise.

The potential downgrade of Pakistan to MSCI Frontier Market from Emerging Market kept inventors on their toes. The dreaded Financial Action Task Force (FATF) concluded its three-day visit of the country and asked to do more before the next meeting due in September for removal from the grey list.

On the political side, former prime minister Nawaz Sharif was granted bail on medical grounds together with other key political figures of Pakistan People’s Party which signalled ease in political noise.

Foreigners again turned net buyers of the marginal sum of $0.5m in the outgoing week compared to net purchases of stocks worth $3.1m the week before. Foreign inflow was witnessed in commercial banks $2.6m and exploration and production $1.1m. On the domestic front, major sell-off was seen by individuals of $5.4m and companies $5m.

The average daily traded volume surged 53pc week-on-week to 128m shares, given increase in activity in lower priced stocks mainly in the last two sessions of the week. The traded value increased by 10pc to $31m.

According to Arif Habib Ltd, sector-wise oil and gas marketing companies recorded major gains of 76 points in the outgoing week, followed by fertilizer (41 points), automobile assembler (36 points) and pharmaceuticals (25 points).

News flows regarding the gas utility companies seeking hefty tariff hike from next fiscal year pushed up prices of stocks in the Sui twins. On the flip side, sectors that contributed negatively include power generation and distribution (52 points), food and personal care products (23 points) and insurance (23 points).

Scrip-wise major positive contributions came from SNGP (38 points), MTL (30 points), BAHL (30 points), Engro (24 points), and UBL (24 points). Scrips that contributed negatively included HBL (64 points), Hubco (54 points) and Nestle (29 points).

Going forward, market gurus expect stocks to trade range-bound in the upcoming week amid lack of triggers. With the State Bank of Pakistan raising the key discount rate by 50bps, leveraged sectors such as cements, steel, fertilisers, OMCs and ­textiles were feared to come under pressure while banks could support the index. Investors would also be keenly tracking progress on IMF bailout package.

Published in Dawn, March 31st, 2019