Stocks snap four-week rising streak on profit-taking

Published September 29, 2019
The four-week gaining streak of the benchmark KSE-100 index that yielded strong returns of 7.9 per cent came to a halt in the outgoing week as investors resorted to profit taking. — AFP/File
The four-week gaining streak of the benchmark KSE-100 index that yielded strong returns of 7.9 per cent came to a halt in the outgoing week as investors resorted to profit taking. — AFP/File

KARACHI: The four-week gaining streak of the benchmark KSE-100 index that yielded strong returns of 7.9 per cent came to a halt in the outgoing week as investors resorted to profit taking. The index plunged 677 points in the first four days of the week. Luckily, it bounced back on the last trading session, paring 94pc of earlier losses.

The reversal was attributed to end of selling pressure from foreigners, some positive news and smooth settlement of the futures rollover.The KSE-100 index thus closed the week on a flattish note with minor pull back of 40 points at 32,070.

The week started out with dull investor sentiment as the market had little to cheer over the news flow. The State Bank of Pakistan forecast the inflation to remain high for the next two years while the Asian Development Bank (ADB) reported a gloomy outlook for the economy estimating GDP growth rate of the country to settle at 2.8pc in FY20, while average inflation to remain in double digits.

Negative sentiments were seen among local investors and speculators due to continuous foreign selling. However, investors put faith in the positive reports coming out in the later days of the week relating to the macro- economic indicators and the apparent win in diplomacy over the Kashmir issue.

Other factors that raised investors’ appetite for stocks included the International Monetary Fund mission appreciating the progress achieved so far in the programme and the government officially initiating the process of Eurobond/Sukuk issuance, inviting the financial advisors to submit their proposals.

Foreign selling in the week clocked-in at $8.76 million compared to a net buy of $7.8m the week before. Selling in the cement and commercial came to $2.4m and $2.2m respectively. On the domestic front, major sell-off was reported by banks/DFIs amounting to $6.7m, individuals $1.18m and broker proprietary trading $6.2m.

The market participation remained weak, with average daily trading volume declining 12pc week-on-week to 107.96m shareswhile average value traded clocked-in at $25m (down by 24pc WoW).

Sector wise, negative contributions in the outgoing week came from commercial banks losing 122 points, power generation and distribution 24 points, chemical 21 points, pharmaceuticals 14 points, and automobile parts and accessories 13 points. On the other hand, Insurance sector, up 9.8pc, was among the highest gainers during the week. Scrip wise negative contributions to the Index were led by Habib Bank Ltd down 67 points, Hub Power Company 56 points, United Bank Ltd 29 points and Searle Pakistan 27 points.

Going forward, investors would be closely watching the macro numbers, i.e. tax collection and inflation.The Federal Board of Revenue needs to collect massive Rs490 billion in tax revenue for the month of September to meet its quarterly target of Rs1.071 trillion.

On the political side, after Friday’s speech in the United Nations by PM Imran Khan, investors would watch for any hint of things turning ugly in Kashmir as warned by Pakistan. The Financial Action Task Force issue, which could once again flare up, would also influence market sentiments, as its plenary session (scheduled on 16-18 October) draws closer.

Published in Dawn, September 29th, 2019

Editorial

27 Nov 2021

Supporting ECP

ALTHOUGH the government bulldozed legislation on electronic voting machines through parliament, the reality is that...
27 Nov 2021

Forgiving the Taliban

IF there is one takeaway from Thursday’s gathering of more than 1,000 Shia Hazaras in Kabul, it is the call given...
Living in fear
Updated 27 Nov 2021

Living in fear

THE registration of a blasphemy case against four members of a family from a village on the outskirts of Lahore has...
26 Nov 2021

State Bank’s projections

THE macroeconomic projections listed by the State Bank of Pakistan in its annual report on the nation’s economy...
Ad distribution
Updated 26 Nov 2021

Ad distribution

If present govt can muster will to achieve this task it would set a solid precedent that no future govt would find easy to undo.
26 Nov 2021

Messy passengers

NEWS that passengers on a PIA flight from Manchester to Islamabad left so much litter on the plane that it led to a...