KARACHI: Stocks failed to break the tight bear hug in the outgoing week as widespread losses across most sectors saw the KSE-100 index trampled by 1,008 points (2.71 per cent) to close at a 3-year low level of 36,123. Including the week’s declines, the market has produced negative return of 4.9pc for the year-to-date.

The week also marked the fag end of financial results reporting season with several commercial banks, cement and chemical companies unveiling earnings that were better than expectations. But investors remained in the grip of fear and apprehensions on the upcoming events, none of which had the propensity to push the market forward.

On top of the traders’ concerns was the persistent economic despondency at the head of which was the lack of clarity on the finalisation of International Monetary Fund programme. The investors were spooked by the conditions that would be tied to the plausible $6.5 billion package by the Fund.

Some of the lender’s demands including power sector reforms including resolution of circular debt, 25pc hike in consumer power tariff and higher gas prices. Other than that, the market was uncomfortable over the outcome of Financial Action Task Force review; the possible burden on heavy taxation in the upcoming budget to be tied over revenue shortfall.

“All of those negatives discouraged investors to pick even blue-chip scrips that are now available at attractive valuations as the market is looking at grim bottom line of corporates for at least the next two quarters,” said a fund manager.

During the week, foreign investors were net buyers of equity worth $4.76 m, down from net buying of $9.3m the preceding week. Inflows were mainly witnessed in cement at $3.9m and commercial banks $2.0m. Among local investors, banks were net buyers of shares valued at $1.71m while mutual funds dumped stocks worth $13.4m. Individuals mopped up liquidity of $2.2m.

The average daily volume dropped 14pc to 105m sharers while traded value declined by 13pc to $29m in the four-day trading week. Leaders included Unity Foods at 36.6m shares, Maple Leaf Cement 23.2m, Pak Elektron 22.9m shares and Pakistan International Bulk Terminal 21.1m.

Sector-wise negative contribution to the index came from oil and gas exploration companies, decreasing by 308 points amid fall in international oil prices, commercial banks 171 points, fertilisers 148 points, power generation and distribution 89 points and oil and gas marketing companies 70 points. On the flip side, sectors that contributed in small measure to the positive side included tobacco, higher by 27 points and insurance 5 points.

Among scrips, downside was most pronounced in Pakistan Petroleum which declined 125 points, Oil and Gas Development Company 90 points, Pakistan Oilfields 78 points and Habib Bank 73 points. Meanwhile, Pak Suzuki Motor, up 24 points, Philip Morris 20 points, Habib Metro 12 points and Pakistan Tobacco 7 points.

Going forward, muted activity is likely to be witnessed as is generally the case in Ramazan, partly due to shortened trading hours. Investors would keenly track the outcome of the staff-level agreement of IMF programme and the conditions associated with the possible bailout. By mid-week, the market would focus on FATF meeting scheduled for May 15, the MSCI review and budget FY20.

Published in Dawn, May 5th, 2019