KARACHI: The three-week gaining spree on the stock market was broken in the outgoing week as the KSE-100 index settled at 45,868 points, representing a minor fall of 63 points, or 0.43 per cent, after hitting the 46,000 level.

Following an untiring run up for weeks, the bulls appeared to have tired out. Besides, absence of positive triggers and an uncertain economic and political environment brought the stock rally to a screeching halt. World equity markets, on the contrary, soared to record highs as the new US president was sworn in. Nasdaq rose 1.52pc and Dow Jones clawed up by 0.4pc. The international oil prices edged higher but failed to move the heavyweights on the E&P sector of the local stock market.

The economic indicators that weighed on investor sentiments during the week included the emergence of current account deficit for the month of December after five months of current account surplus; the decline in foreign exchange reserves by 1.94pc to $20.1bn. The CCoE giving its approval to discontinue gas supply to captive power plants from Feb 1; increase in power tariff by Rs1.95 per unit together with hike in certain petroleum products, for the second time in a month.

Moreover, the week started on a negative note on worsening gas supply situation in the country which might result in suspension of gas supply to industries amid decline in international crude prices.

On the political side, the opposition tried to build pressure by holding a protest rally outside the offices of the Election Commission of Pakistan to press for announcement of results of foreign funding case. Investors also avoided building portfolio as they waited for the monetary policy decision by the SBP, which kept the interest rate unchanged at 7pc in line with analysts’ consensus forecasts. The concerns over the second wave of Covid-19 subsided on reduced new cases and reports of China providing 0.5 million doses of Sinopharm vaccine to Pakistan by the end of this month.

The redeeming feature for the week was the net purchases by foreign investors (mainly overseas Pakistanis) in the sum of $5.51m. On the local front mutual funds were the major sellers of equity worth $17.96m to meet redemption by a large pension fund. Brokers took profit through sale of shares valued at $7.45m and insurance companies disposed of equity of $1.83m. Individuals kept faith in Pakistan equities by buying of shares worth $12.26m.

According to Arif Habib Ltd, contribution to the index downside was led by oil and gas exploration companies (143 points), fertiliser (43 points), oil and gas marketing (33 points), automobile assembler (25 points), and pharmaceuticals (16 points).

Scrip-wise major losers were PPL (65 points), OGDC (59 points), POL (59 points), Engro (31 points), and MCB Bank (22 points). Whereas, major gainers were TRG (110 points), MARI (41 points), BAHL (34 points), KTML (29 points) and ICI (26 points).

Average daily traded volume in the outgoing week was down 25pc to 510m shares and the traded value amounted to $118m. K-Electric topped the list of volume leaders with 268.0m shares.

Going forward, the upcoming being the roll-over week may see some more slowdown in investor participation. The SBP policy rate remaining unchanged with the governor of the central bank asserting that it could continue to hold at the level for some time together with encouraging projections on current account deficit expected to remain below 1pc of GDP for FY21, might give comfort to the investors. Nonetheless, the upcoming corporate financial results for the quarter ended December 2020 would provide the direction to the market.

Published in Dawn, January 24th, 2021