KARACHI: The stock market fell for fourth week in a row. If the final week of January was bad enough with the KSE-100 index recording a fall of 2.4 per cent, the outgoing one was worse with 3.6pc or 1,487-point decline to settle at 40,144.

The plunge of 2,489 points or 6pc in two weeks has taken a toll on nervous investors, who are whispering that the bear may be back. But pragmatists of the market were keeping their cool and suggesting that such a correction was always on the cards, considering the rally since mid-Aug that had seen the index climb by 50pc to a peak of 43,218.

The spoiler in the outgoing week was the January inflation which came up at 14.6pc, highest since December 2010. It caused the investors to flee on Monday after the announcement pulled the index down by a record 1,221 points or 3pc in a single day.

Investors did not quite recover from the blow for the rest of the three sessions (week shortened by public holiday on Wednesday). Higher-than-expected inflation dampened investors’ hopes of an early easing in monetary policy by the State Bank and the anticipation of rate cut was pushed back to the second quarter.

Further evidence of high interest rates for the time being was provided by the rise in bond yields following the latest Pakistan Invest­ment Bond auction in which the three-, five- and 1-year bonds’ yields increased by 30 basis points to 12.05pc, 21bps to 11.4pc 10bps to 11pc, respectively.

The start of the IMF second review amid missed target of revenue collection also caused concerns which were exacerbated by talks of a mini-budget. The up­­coming decision by the FATF on keeping Pakistan in the grey, black or white list also kept investors cautious.

Foreign selling clocked in at $14.2 million, which compared to a net inflow of $8m the earlier week. Foreign funds sold equity worth $7m in cement and exploration and production $5.1m. On the domestic front, major buying was reported by insurance companies of $13.7m and individuals $7.7m. Average volume dec­reased 1pc to 168m shares while the mean traded value inched lower 1pc to $45m.

Sector-wise, the index was dragged down by oil and gas exploration companies, declining by 376 points, commercial banks 241 points, oil and gas marketing companies 150 points, fertiliser 140 points and cement 125 points.

Published in Dawn, February 9th, 2020