KARACHI: After a volatile week, the benchmark KSE-100 index closed at 38,220, representing gains of 236 points (0.62 per cent).

In the outgoing week, the investors were caught between hopes and despair. Some positive news such as the higher than expected decline in inflation numbers for February at 12.4pc, down from 14.6pc a month earlier, sparked hopes of an early cut in the SBP interest rates and spur growth in local economy. On the negative side, there was the mounting fear of global economic slowdown that saw the floor squeak under the feet in bourses of US, Europe and Asia.

The market started off on a refreshingly positive note, as the KSE-100 climbed 1,312.68 points (3.5pc) in a single day, as investors went into buying spree mainly in the cyclicals and highly leveraged names in anticipation of interest rate cut in the upcoming monetary policy statement.

Other events such as the decline in Pakistan Investment Bond yields in the range of 15-46 basis points on Wednesday’s auction and trade deficit for February down 20pc; decrease in urea price to Rs1,665 per bag, and the government’s reinvigoration of 10pc divestment in Oil and Gas Development Company and Pakistan Petroleum helped attracted inflows in equities. But for all that, the session on Friday saw the index tumble by 1,162 points (2.95pc) which wiped off all the gains of the first trading day, leaving it mildly positive.

Foreign selling continued with $16.7 million compared to net sale of $22.5m the preceding week. Their sell-off was witnessed in in cement amounting to $5.1m and exploration and production of $3.5m. On the domestic front, major buying was reported by mutual funds at $15.4m and companies $11.1m while individuals and brokers offloaded equity worth $18m and $1.4m, respectively. Market participation saw an upsurge as the average volume rose by 40pc to 242m shares and mean traded value stood higher 35pc at $65m.

Sector-wise, cement outperformed the index by 12pc and added 329 points where news of 34pc growth in despatches in February and rumours of potential price increase saw investors build fresh position in stocks across the sector. Negative contributions were made by banks, declining by 388 points, as particpants sold shares on expectations of a rate cut in the upcoming monetary policy, power generation and distribution 49 points and miscellaneous 10 points.

Among scrips, major gains were made by Lucky Cement 8.31pc; DG Khan 15.53pc and Colgate Palmolive 18.17 points. Declines were led by Habib Bank, down 119 points, United Bank 71 points and Bank Alfalah 54 points.

Going forward, fears of carnage by coronavirus on global economy that would translate in lower corporate profitability worldwide would continue to deter investors for exercising the option of even stocks at their cheaper valuations and venture out of the safe havens. The astonishing decline in global oil prices would, however, be a positive for Pakistan as it would ease inflation and further trim the feared current account deficit

Published in Dawn, March 8th, 2020