KARACHI: The short two-day working week (Monday and Friday) due to Eidul Azha was eventless at the stock market. Participation remained low and ended in muted gains of 39 points on Monday and an equally tiny loss of 80 points on Friday. With net 41 points decline, the KSE-100 Index closed at 47,793.

Calculations by brokerage Arif Habib Limited showed that cements scrips were badly beaten, due mainly to the increase in international coal prices. Sector-wise cements took away 49 points from the index, followed by 19-points slump in food and personal care; 14 points in refineries; 12 points in technology and communication and 11 points in the textile composite. Scrip-wise major losers were noted in TRG (30 points), ENGRO (25 points), PSO (14 points), Lucky (12 points), and HBL (11 points). Scrip-wise, major gainers were SNGP (48 points), PSEL (33 points), Systems (23 points), FFC (18 points) and MEBL (16 points).

Foreign investors offloaded stocks worth $21.02 million. It represented mainly the massive sell-off of shares in Byco by Abraaj Capital under the Negotiated Deal Market (NDM). These were picked up by local participants with individuals worth $7.50m; broker proprietary trading $2.16m and companies $1.69m.

Investors at the market remained on edge for all of the week. There was hardly anything to cheer them up while negative news was aplenty. The rise in Covid-19 infection ratio to 6 per cent from 2pc countrywide and to 20pc in Karachi was the most worrisome issue. The Sindh government has directed strict restrictions from Monday to curb the spread of coronavirus including early market closures; ban on indoor and outdoor dining at restaurants and closure of educational institutions. Traders at the market grumbled that it could lead to production losses with an unsavoury impact on future bottom line of companies.

Other than that the drop in value of the rupee with the dollar at nine-month high; wider than expected current account deficit were all enough reasons to drive the investors out of the market. The average daily traded volume of shares plunged 32pc over the earlier week to 318m shares while the average daily traded value also dropped 26pc to $71m.

A major upcoming event would be the start of the results season. Many market participants predict selected sectors to produce better results given a more comfortable last quarter of FY21. The healthy earnings and attractive payouts from the underperforming Banking and Exploration & Production sectors could provide the required trigger for the market for the resumption of a bull run as the two sectors have heavy weight in the index. The downside risks are the ability of the authorities to control the Covid outburst and tame the CPI inflation going forward.

Published in Dawn, July 25th, 2021