KARACHI: Caught between the bull and bear in the outgoing week, the Pakistan Stock Exchange (PSX) took investors on a roller-coaster ride with the KSE-100 index finally closing with scant gains of 411 points (1.3 per cent) but managing to settle slightly above the psychological 32,000 level at 32,033 points.

The week started off on a positive note following the announcement of a package for the construction industry. But the Asian Development Bank and the World Bank poured cold water over investors’ enthusiasm, with the dire projections of economic slowdown.

It prompted investors to book profit regardless of the attractive valuations. Reports of surge in cases of coronavirus in the country also kept investors worried. Yet the high net-worth individuals took courage and returned for value buying in the last two days of the week on the hike in international crude oil prices in anticipation of settlement of dispute between the Saudi Arabia and Russia and energy sukuk issuance.

Furthermore, the Financial Action Task Force (FATF) extended Pakistan’s deadline to meet targets till September, which enabled the timid investors to heave a sigh of relief.

Foreign selling persisted with outflow of $16.2 million in the outgoing week. Those related to selling in the stocks of commercial banks in the sum of $5.9m and cement $2.1m. On the domestic front, major buying was reported by individuals amounting to $9.4m and insurance companies $4.0m.

As institutional investors generally remained on the side-lines, the average daily traded volume declined by 18pc week-on-week to 186m shares while traded value fell 8pc to $42m.

Reports that the third tranche worth $450m under the Extended Fund Facility may be delayed as the International Monetary Fund (IMF) focuses on Pakistan’s request for $1.4 billion to combat Covid-19, brought about some pressure in the market. Furthermore, the FATF has granted a five-month grace period to Pakistan to submit its performance report on the remaining benchmarks which was a relief.

Sector-wise positive contributions came from oil and gas exploration companies, up 132 points, cement 78 points, fertiliser 71 points, insurance 70 points and power generation and distribution 37 points. Meanwhile, sector-wise negative contributions came from automobile parts and accessories 20 points, tobacco 13 points and textile composite 13 points. Scrip-wise, the lead gainers were the Oil and Gas Development Company 127 points), Bank Al Falah Ltd 51 points, Hub Power Company 49 points, Fauji Fertiliser Company 42 points and D. G. Khan Cement 40 points.

Going forward, market pundits were putting their weight behind the IMF board meeting scheduled for April 16 for the approval of $1.4bn under the Rapid Financing Instrument. It is expected to relieve fiscal pressures and stimulate aggressive measures to counter any economic fallout resulting from the pandemic.

The all too important number of current account for March would also be unveiled in the upcoming week which would provide clarity on the stability of the currency issue.

Depending on the new cases of coronavirus in the country and weighing the benefits against risk, the federal government and Sindh government would decide on lifting the lockdown or prolong it further which would be an important matter to bear on the economy.

The construction sector is also gearing up to start operation from April 14 under the new package which could keep the cement and steel sector in the spotlight.

Published in Dawn, April 12th, 2020