KARACHI: The stock market continued to consolidate earlier gains, making it the second successive week of dull and drab activity with bulls and bears managing to secure an upper hand in turns that saw the index close flat with minor uptick of just six points (0.01 per cent) at 40,249.

Investor interest remained centered on results of the plenary session of the Financial Action Task Force (FATF) convened to ascertain Pakistan’s status. Wait was over at the end of the session on Friday when the anti-money laundering and terror-financing watchdog decided to defer until June its verdict asking the country to comply with the few remaining requirements.

They were also uncertain over the final outcome of the International Monetary Fund (IMF) staff deliberations over the release of third tranche and whether the lending institution had agreed to keep budgeted revenue targets for FY20 unchanged.

On a positive note, investors were relieved as the prime minister announced no change in gas and electricity prices until at least the next budget against rumours of an earlier increase. Moreover, the foreign exchange reserves continued to rise for the 20th week, crossing the $12.5bn mark.

Corporate results coming out during the week were mixed. Textile data was also released where the sector’s exports stagnated recording a minimal growth of 2.3pc. Among other developments, despite increase in international oil prices by 4.5pc, oil and gas exploration sector remained under pressure due to foreign selling of equities on most days.

Foreigners offloaded stocks worth $8.57 million compared to a net sale of $11.15m the earlier week. Major selling was witnessed in oil and gas exploration companies at $3.02m and cement $2.77m. On the local front, buying was reported by insurance companies $7.84m followed by other organisations $3.81m.

Participation remained thin with volume recording a major dip of 37pc to average daily turnover of 106m shares with mean traded value down 23pc to $31.2m.

Sector-wise, contribution to the index upside was led by commercial banks, higher by 133 points, as financial results of Habib and United was better than expectation, cement 20 points, textile composite 15 points, leather and tanneries 11 points and automobile parts and accessories nine points.

Among scrips, major gainers were Habib Bank, increasing by 70 points, United Bank 53 points, Oil and Gas Dveelopment Company 37 points, MCB 34 points and Fauji Fertiliser 30 points while losers were Engro Corporation, down 65 points, Pakistan Tobacco 54 points, and Pakistan State Oil 48 points.

Going forward, market gurus expected the bourse to trade sideways to positive as they react to the Friday decision of the FATF review. Further, the approval of IMF’s third tranche and ban imposition by the government on export of essential food items so as to control rising inflation along with deferment of hikes in utility rates till Jun’20 could also impacted market trend.

Investors may also be encouraged by the improvement in macroeconomic indicators such as the current account deficit shrinking by 72pc in 7MFY20. The market may take cue from the developments such as the planned visit of China’s president and conclusion of the US-Taliban peace talks.

Published in Dawn, February 23rd, 2020