KARACHI: Stocks finished the tumultuous three-session election week on a negative note as the ‘unusual delay’ in announcing election results created uncertainty among investors about a smooth return to a stable political government as a result the benchmark KSE 100-share index came under renewed selling pressure settling the short week below 63,000.

As Feb 5 was a closed holiday on account of Kashmir Day, the stock market opened the week on Tuesday rallying 796.10 points on aggressive pre-poll buying with positive news of possible approval by the IMF on circular debt and power tariff rationalisation plans.

On the eve of polls, the market continued its overnight bullish trend and added another 344.85 points, propelling the index to settle above 64,000.

On Friday, the equities fell like a house of cards and the index plunged by 2,300 points intraday as an inordinate delay in election results triggered aggressive selling.

However, the index got some support after the Election Commission of Pakistan announced more results towards the closing of trading and the news of a likely sovereign rating upgrade by Standard and Poor’s (S&P) to “B” from “CCC+” helped the market closed the session with a trimmed loss of 1,200 points.

Hence, the KSE-100 index closed at 62,944 points after losing 59 points or 0.09pc week-on-week.

Arif Habib Ltd said the local market exhibited a range-bound behaviour in the outgoing short week. Market sentiment was predominantly influenced by election-related developments.

Moreover, on the last day of the week, the market showed signs of pressure due to a delay in the announcement of polling results, leading towards uncertainty among investors. Furthermore, a T-bill auction took place on Tuesday, in which SBP raised Rs64 billion against the set target of Rs480bn. Moreover, the State Bank of Pakistan on Friday reported that its foreign exchange holdings dipped by $172 million to $8bn during the week that ended on Feb 2.

However, the rupee closed at 279.28 against the greenback, strengthing by 0.05pc week-on-week ignoring the heating up political arena after the general elections.

Sector-wise negative contributions came from fertiliser (60 points), technology & communication (45 points), food & personal care products (24 points), oil & gas marketing companies (15 points) and textile composite (14 points).

Meanwhile, the sectors which mainly contributed positively were power generation & distribution (54 points), miscellaneous (40 points), commercial banks (21 points), and oil & gas exploration companies (15 points).

Scrip-wise negative contributors were Engro Corporation (55 points), Oil and Gas Development Company Ltd (50 points), Systems Ltd (31 points), Habib Bank Ltd (28 points), and Attock Petroleum Ltd (20 points). Positive contributions came from Hub Power Company (62 points), Pakistan Services Ltd (48 points), Pakistan Petroleum Ltd (45 points), Bank Al-Habib Ltd (40 points), and Lucky Cement (22 points).

Foreign buying was witnessed during the outgoing week, clocking in at $5.7 million compared to a net sell of $9.7m last week.

On the local front, selling was reported by mutual funds ($5.5m) followed by other orgainsations ($1.2m).

Market participation remained subdued as investors awaited clarity over the election results. The average volume dipped 2.3pc to 306m shares while the average value traded rose 21.7pc to $50m week-on-week.

According to AKD Securities Ltd, the market outlook would hinge on the final result of the elections, with indications pointing towards a PDM-like government as the election results show PTI-backed independents have a clear lead over all political parties.

If this transition occurs peacefully, it could be positive for the market as it would boost investor confidence, especially considering previous efforts by a similar setup.

Published in Dawn, February 11th, 2024