KARACHI: The stock market traded sideways during the outgoing week as investors remained undecided over the direction going forward. The index closed with a minor gain of 16 points (0.04 per cent) at 40,848.

Positive news flow on improvement of macro fundamentals — increasing foreign exchange reserves, rave review report from the International Monetary Fund and disbursement of second tranche of $452m - created some excitement. But Saudi FM and Chinese delegation’s visit went unnoticed as the local and geopolitical situation kept market in a state of uncertainty.

The government found itself in difficult diplomatic position after Prime Minister Imran Khan cancelled his scheduled attendance at the Kuala Lumpur summit following his recent visit to Riyadh. Border skirmishes with India kept investors nervous.

Other negative was the concerns on the fallout of verdict on General Musharraf and the rollover week. Also the Christmas holiday and year-end season impacted volumes.

Foreign selling was witnessed at $2.9 million compared to net buy of $3.1m the earlier week. Outflow was noted in exploration and production worth $1.5m and commercial banks $0.7m. On the domestic front, major buying was reported by insurance companies $10.5m and mutual funds $7.2m.

Market participation declined due also to shortened four-session week. Average daily traded volume clocked in at 230m shares (down 23% WoW). Similarly, average daily traded value registered decline of 35pc WoW at $54m.

Sector-wise, positive contributions came from commercial banks, higher by 43 points, power generation and distribution 42 points, oil and gas marketing companies 19 points, engineering 15 points and cement 13 points. Whereas, decliners were made by insurance sector, down 31 points, tobacco 31 points, automobile parts and accessories 21 points and fertilisers 17 points.

Among scrips, positive contributions came from Engro Corporation, rising by 70 points, Hub Power 55 points, Oil and Gas Development Company 39 points, Pakistan State Oil 20 points and United Bank 18 points.

Other major news included announcement by Pakistan Petroleum Ltd of two oil and gas discoveries in Sindh and Balochistan, National Electric Power Regulatory Authority allowing Discos to charge additional Rs1.56 per unit, Rice exports jumped 39pc to 1.6m tonnes in five months and rise in SBP foreign reserves by $14m to $10.9bn.

Going forward, major participants were pushing a positive outlook on the back of rising foreign exchange reserves and stable rupee-dollar. Furthermore, the receipt of second tranche of $452m of IMF loan would take off some pressure on the economy.

Moreover, as the new calendar year begins, market was expecting fresh domestic and foreign portfolio investment, which was thought to improve sentiments and take the index to new peak for 2020.

Published in Dawn, December 29th, 2019