KARACHI: Bears beat the bulls in the outgoing week as KSE-100 index fell 162 points (0.4 per cent) to close at 37,130.

The situation could have been worse, but for the last three sessions that saw the market rally by 726 points to recoup greater part of the 888 points lost in the first two days that had earlier plunged the index to three-year low.

At the verge of entering International Monetary Fund programme, economic clarity continues to evade investors which dampened sentiments. IMF and FY20 budget which were feared to be laden with heavy taxation, monetary tightening and possibly more rupee devaluation spooked investors.

Market confidence also received a jolt from the blow by the sudden resignation of Asad Umar the preceding week as investors worried that since he had spearheaded the talks with IMF, his stepping out of the ministry at such crucial juncture could jeopardise the bailout. Hafeez Shaikh’s induction as adviser on finance was, however, taken by the market as a positive move.

During the week, earnings unveiled by the corporates in energy, cement and particularly banking sectors surprised the market as most outperformed consensus forecasts, which put life back in the market which bounced back to regain the lost ground. Investors also viewed with interest the development regarding prime minister’s visit to Iran where President Rouhani announced that his country is ready to meet Pakistan’ s oil, gas and electricity demands. Upon his return, PM Khan left for China where he also met with the World Bank CEO.

Foreign investors who were net sellers of $1.9 million in the preceding week turned to buying worth $9.3m with significant inflows witnessed in commercial banks and oil and gas exploration companies. Among local investors, banks were net buyers of $3.1m while mutual funds and individuals were net sellers of $8.2m and $4.6m of equity, respectively.

Trading activity remained weak and skewed towards mainboard items with the average daily trading volume declining 30pc to 122.45m shares. Average daily traded value dropped 15pc to $33m.

Sector-wise, cement benefited from the rumours circulating all through the week of possible increase in prices which saw the sector close the week with gain of 2.4pc. This was followed by commercial banks which rose 1.5pc on better-than-expected financial results. On the other hand, principal laggards included engineering sector, down 4.2pc, and oil marketing companies lower by 2.6pc.

Among scrips, major downside to the index came from Pakistan Petroleum Ltd (PPL) conceding 51 points, Fauji Fertiliser 30 points, Searle Company 29 points and Pakistan State Oil 27 points. On the flip side, positive contributions came from United Bank, higher by 75 points, Engro Corporation 28 points, Dawood Hercules 22 points, and Lucky Cement 21 points.

Going forward, the earning season announcements could dictate broader market direction in the near term. Some blue-chip companies such as PPL, Hub Power, Nishat Chunian, Nishat Chunian Power and Waves Singer are scheduled to announce financial results. The week would also be crucial with regard to talks with the IMF team which is scheduled to arrive in Pakistan to finalise the package. Speculation on the contours of the upcoming budget and announcement of amnesty scheme are other key flashpoints which could provide direction to the market.

Published in Dawn, April 24th, 2019