KARACHI: Stocks put up a dismal performance in the outgoing week with all five trading sessions ending in the red. The KSE-100 index plunged by 1,098 points, or 2.4 per cent, over the week and settled below the 46,000 level at 45,808.

Optimists described the market downside as a healthy correction after remaining on the upward trajectory for the six preceding weeks. The noticeable feature during the week was the change of hands in one billion shares on Wednesday, which happened for the first time after 16 years since 2005. That, however, did nobody any good, for more than half the traded volumes were in penny/junk stocks led by WorldCall Telecom, K-Electric and Telecard.

Companies continued to unveil financial results but failed to boost investor confidence. The entire energy chain also remained unimpressed by the finalisation of the agreement between the government and the Independent Power Produ­cers (IPPs). The E&P sector also remained unmoved regardless of the international oil prices crossing record high $60 a barrel.

Investors resorted to profit-taking across the board, save for the cement sector where stock values continued to rise for the second week following disclosure of Cherat Cement’s healthy financial results. MSCI quarterly index review was released during the week which showed no change and was therefore a non-event for the market.

Foreign investors continued to seek exit from the local market with net sale of equities worth $3.2m compared to net sell of $2.7m last week. Outflow was witnessed from commercial banks amounting to $4.3m and from E&P sector to the tune of $ 0.4m.

On the domestic front, major buying was carried out by individuals amounting to $12.7m while companies booked profit of $8.4m. Average daily volume stood at 734m shares (up by 32pc) while the average value traded settled at $169m, down by 1.5pc. The diverse figures representing heavy volumes in penny stocks.

Experts anticipate the market to bounce back in the upcoming week due to several positives. The political uncertainty is dissipating as the opposition’s protest starts to whimper away.

However, some sound and fury cannot be ruled out until the Senate election on March 3. The declining cases of Covid-19 together with the vaccination gathering pace as the government has granted permission to private firms to import vaccines, eases the second big worry on the investors’ mind.

On the economic side, accommodative monetary policy stance; improving macroeconomic indicators and finalisation of schedule of payment to IPPs would help lift sentiments.

Some big corporates which include Engro, Mari, PSO, D.G. Khan, would be coming out with their financial results during the week. The only issue that can keep investors on the side of caution is the upcoming FATF review where investors continue to remain between hopes and apprehensions regarding Pakistan’s status.

Published in Dawn, February 14th, 2021