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KARACHI: Stock market remained in a tight bear hug in the outgoing week where investors started to dump stocks in the first three days, which dragged the benchmark KSE-100 index to a three-year low at 36,579.32. However, the market managed to claw back by over 760 points in the last two sessions to trim down the week’s loss by 184 points (0.5 per cent) and finally settle at 37,338.

The market saw intense volatility during the week as it started with the World Bank estimating Pakistan’s GDP growth at 3.4pc in FY19, to further drop to 2.7pc in FY20. The International Monetary Fund (IMF) also downgraded the growth rate to an average of 2.9pc during 2019-20, which triggered panic selling by investors.

The index managed to recover much of the losses in the last two days as news flow of Pakistan’s potential entry into an IMF programme and encouraging talks in the ongoing meetings with the World Bank in Washington calmed down the markets and individual investors started to build fresh positions on much discounted stock prices.

Cement, which had suffered hammering at the start on rumours of cut in rates and price war among producers, recovered on reports of restoration of cement prices and the drop in international coal rates. Yet the sector stood out as the worst performer, tearing off 209.9 points.

Improved trade deficit numbers (down 14pc in 9MFY19) provided further support to the market and growth in automobiles sales by14pc month-on-month in March also helped lift investor sentiments.

Foreign selling continued, clocking in at $2.2m, compared to net sales at $3.7m the preceding week. This was mainly concentrated in banks at $3.4m and power $0.5m. Amongst domestic investors, banks and companies provided much of the liquidity by buying stocks valued at $4.3m and $3.6m, respectively. Mutual funds were net sellers of $3.4m worth equity.

Average daily volume kicked in at 148m shares, up 25pc, while average value traded clocked in at $34m, higher by 36pc. Leaders were: K-Electric with 57.98m shares, Worldcall Telecom 50.63m, Maple Leaf Cement 47m, Fauji Cement 46.28m and Bank of Punjab 42.95m.

Sector-wise, power generation and distribution added 73.4 points, followed by commercial banks 72.2 points, oil and gas marketing companies 20 points, food and personal care products 11.8 points and automobile assemblers 11.7 points. Besides cement, other negative sector-wise contributors to the index were: oil and gas exploration companies, decreasing by 63.7 points, fertiliser 39.1 points, textile composite 19.3 points and pharmaceuticals 18.6 points. Pharma sector took a beating as the government initiated a crackdown against increase in medicine prices.

Scrip-wise, top performers were Hub Power, up 5.77pc, Pakistan State Oil 4.62pc and National Bank 4.06pc. On the flip side, Cherat 16.4pc, Pioneer 15.6pc and Maple Leaf Cement 14.1pc remained the worst performers.

Going forward, market would be dominated by the results season which would begin in full swing, providing it major direction.Investors would focus on Pakistan’s third compliance report submission to Financial Action Task Force to be taken up for review in May. The news flow will also be fixated on IMF programme, budget proposals, announcement of another amnesty scheme and market Support Fund.

Published in Dawn, April 14th, 2019