KARACHI: The stock market remained under the control of the bears during the outgoing week. And despite a surprise 805-point rally on Thursday spurred by the unexpected mutual funds’ buying of stocks worth $12.3m, the index closed in the negative trajectory for the remaining four sessions to close the week below the barrier of 48,000 points at 47,563, down by 123 points.

The week was plagued by negative news on several fronts; events continued to reshape neighbouring Afghanistan following the flight of the US; the simmering tensions between Pakistan and the US that threaten to mar the talks with IMF as well as jeopardize the country’s exit out of the grey list.

Within the country, political temperature was rising as the scattered opposition parties started to regroup against the government. Further, the continued downward spiral of the rupee against the dollar amid rising international crude oil prices were seen by the investors as a major drag on cost of production going forward. Finally, the threat of the fourth wave of Covid and increasing number of cases unnerved investors. On the flip side, the outgoing week saw Pakistan raising $1bn through Eurobonds.

Foreign selling continued during the week clocking in at $5.2m. Outflow was witnessed in other sectors ($5.4m) and food sector ($1.1m). On the domestic front, major buying was reported by companies ($4.1m) and mutual funds ($3.9m). Average daily traded volume stood at 486m shares, down 22pc week-on-week.

Sector-wise negative contributions came from Oil & Gas Exploration Companies (68 points), tobacco (57 points), refinery (49 points), textile composite (41 points), and food & personal care products (36 points).

Whereas, the sectors that contributed positively included commercial banks (127 points), fertiliser (50 points), technology & communication (50 points), investment banks/companie/securities (10 points) and chemical (6 points).

Going forward gurus expect the market to perform on the back of improving macroeconomic fundamentals and the upcoming results season which may see investors’ interest in the cyclical sectors such as cement and steel where the government had announced host of benefits which could help sector companies to produce healthy results.

However, the impact may be diluted by the suppression of margins as the raw material costs continue to surge. Other than that investors may continue to garner interest in the automobile sector on the back of incentives announced in the recent auto policy with vision to make small cars affordable to middle income families.

Textiles have posted considerable gains in recent days as local companies continue to capture export markets. The only fly in the ointment is the fear of the outbreak of fourth Covid wave.

Published in Dawn, July 11th, 2021