KARACHI: Bears continued to dominate the stock market for the third successive week.

The benchmark KSE-100 index plunged by 356 points (1.10 per cent) in the outgoing week to close at 32,103 points.

The index remained in the positive trajectory for the first two days as the investors were encouraged by the visit of the Prime Minister Imran Khan to the US where President Trump hinted about restoring the Coalition Support Fund (CSF) of around $1.3 billion.

But the rally could not sustain itself in the latter sessions as market started to look back at the negatives which included uncertainty over the weak macro indicators; contraction of 3.7pc year-on-year in the large-scale manufacturing (LSM) and depletion in the State Bank of Pakistan foreign exchange reserves by $389 million to $7.6bn.

Financial results unveiled by the Habib Bank Ltd and Pak Suzuki were harbinger of evil tidings as both revealed disappointing earnings. Further, weaker numbers were expected in cyclical sectors such as cement, steel, and automobiles.

The rise of temperature on the political front where the opposition attempted to rally support against the government and move a no-confidence motion against the chairman Senate while the National Accountability Bureau stepping up the accountability process also dampened investor sentiments.

Finally, the increased participation in Pakistan Investment Bonds auction (accepted amount for three years: Rs124.3bn against Rs8.6bn in the previous auction with the cut-off yield at 14.25pc vs. 13.70pc in the last auction) reduced attractiveness of the equities in comparison to parking funds in government securities.

Foreign buying clocked in at $8.4m compared to buying of $6.4m worth stocks the preceding week. Inflows were witnessed in commercial banks at $5.6m and cement $2.3m.

On the domestic front, major selling was reported by mutual funds in the sum of $13.4m and companies $1.2m.

Net cumulative sale by mutual funds in the CY19 to-date amounted to a high order $157.69m. Foreign buyers helped to mop up liquidity with current year-to-date net buying at $74.4m.

Average volumes for the week stood at 75m shares (down by 29pc week-on-week) while average value traded clocked-in at $21m (down by 13pc WoW).

Sector-wise, power and distribution companies dragged the index down by 71 points, followed by food and oil marketing companies cumulatively wiping off 177 points from the index.

Heavy-weights including banks, exploration and production, cements and fertiliser closed flat.

Scrip-wise, negative contributions came from the Hub Power Company down 48 points, Engro Corporation 47 points, Nestle Pakistan 31 points, Mari Petroleum 31 points and Pak Tobacco 27 points.

Going forward, the market is expected to remain volatile since despite the attractive valuations; financial results of big-ticket companies would come pouring in.

Published in Dawn, July 28th, 2019