KARACHI: The stock performance did not make for great headlines in the outgoing week as market remained in search of direction in the absence of any major positive news flow that could spur active buying.

The KSE-100 index largely remained flat, closing down by 535 points (1.24 per cent) at 42,633. On the political side things remained murky as the coalition partners of the federal government kept asking for more.

The government’s decision to eliminate Gas Infrastructure Development Cess on fertiliser sector to reduce prices of urea was feared to hit the bottom line of some companies due to different type of gas tariffs.

Other than that, Oil and Gas Development Company (OGDC) came under the spotlight after the heavyweight exploration and production stock was targeted by rumours of government intending to offer 7pc of its shares in the secondary market at a discount, which pulled the price to its lower lock, dragging the entire market with it. It stabilised only after the Privatisation Commission refuted such rumours and pledged to sell the shares at premium.

On the positive side, the Economic Coordination Committee meeting made material progress towards issue of energy Sukuk-II worth Rs200 billion. The development was thought to be a positive for the energy chain, particularly for the oil marketing companies and independent power producers.

Among other economic news, anticipation of higher inflation on the back of recent rise in prices of perishable food items such as wheat and sugar sparked concerns of a delay in the anticipated easing of interest rates. Under the circumstances, even a minor cut in policy rates in the upcoming monetary policy was thought to be unlikely.

Other than that, investors were perturbed by the current account deficit clocking in at $367m (higher than market expectation) and decline in large scale manufacturing by 4.61pc in Nov’19. The Financial Action Task Force (FATF) decision to come next month raised all the spectre of Pakistan maintaining its place in the grey list or even ditched to the black list. However, the watchdog’s working group meeting in Beijing was thought to have signalled positive outcome. All of that failed to impress the investors.

Foreigners did massive buying on the last trading day of stocks worth $6.59 million which helped them show net purchases of stocks at $4.81m for the outgoing week. Inflow was witnessed mainly in oil and gas marketing companies at $7.73m and fertiliser $1.88m.

On the local front, individuals, the leaders of the August-Decemeber rally, decided to take profit and sold shares amounting to $19.31m followed by broker proprietary trading of $3.05m. Among domestic participants, companies and banks were net buyers of equity worth $9.43m and $3.07m, respectively.

Average volume was down by 31pc over the preceding week to 187m shares, while the mean value traded was up 5.6pc week-on-week to $51.3m. Sector-wise, contribution to the index downside was led by fertiliser, lower by 204 points, commercial banks 87 points, O&GMCs 71 points, oil and gas exploration companies 61 points and tobacco 61 points.

Scrip wise, major losses were seen in Engro Corporation, decreasing by 153 points, OGDC 93 points, Engro Fertiliser 80 points, Pakistan Tobacco 53 points and Habib Metro 36 points. Losses were neutralised by the increase in stock prices of Fauji Fertiliser, higher by 56 points, Mari Petroleum 48 points and Colgate-Palmolive Pakistan 27 points.

Going forward, market sentiments are likely to be driven by the monetary policy, scheduled to be announced on Jan 28. Other major events that could impact the performance include the upcoming financial results in the current reporting season and the rollover week. The reports from FATF would keep investors on their feet.

Published in Dawn, January 26th, 2020