KARACHI: Politics took a heavy toll on the share market in the outgoing week as the KSE-100 index slid 4.9 per cent to close at 43,078 points.

Unending political uproar affected the average daily turnover, which shrank 3.4pc from the preceding week to 184 million shares.

The benchmark index has lost about 10pc value since the start of 2017. It’s down 19pc since reaching its peak of 52,876 points on May 24.

Foreign investors have been net sellers in recent months. But selling pressure from foreigners eased off a little in the outgoing week. Although their net sell amounted to $2 million, the figure was notably down from the preceding week when they sold equities worth $31.2m on a net basis.

In contrast, mutual funds emerged as the largest sellers in aggregate terms. Their net sell was $23.6m against the net buying of $6.5m a week ago. Interestingly, mutual funds were the only local players that sold stocks on a net basis because the rest of domestic investors – individuals, companies, banks, brokers and insurance companies – remained net buyers.

Analysts attribute the surge in selling by mutual funds to the typical retail investor psyche. Small-ticket investors who invest through mutual funds base their investment decisions on the recent market performance. Resultantly, they end up sitting out a stock rally and are the last ones to exit the market after big investors have already booked profits.

Volume-wise, top contributors in the outgoing week were Azgard Nine, Bank of Punjab, Aisha Steel, TRG Pakistan and K-Electric.

According to Elixir Securities, the top gainer within the KSE-100 index was National Foods, which went up 10.3pc, followed by Crescent Jute 6.4pc, Soneri Bank 1.4pc, Dolmen City REIT 0.5pc and Pakistan International Container Terminal 0.4pc.

Pak Suzuki recorded a decline of 15.4pc, followed by The Searle Company 15pc, Ferozsons Laboratories 14.8pc, Feroze 1888 Mills 13.9pc and Engro Foods 13pc.

Sector-wise, banks went down 4pc while the drop in exploration and production was 3pc. Cement stocks fell 7pc on concerns about a price war among producers, according to Topline Securities. Fertiliser shares dropped 5pc because of weak demand and excess inventory levels.

AKD Securities expects the market will continue its bearish momentum given the ongoing political crisis involving the ruling party. However, analysts at Arif Habib Ltd believe the market will heave a sigh of relief as valuations become attractive and political noise takes a back seat. With a slowdown in foreign selling, confidence of investors should help the index rise again.

Companies that are going to hold board meetings next week to approve quarterly results include Kot Addu Power, Bestway Cement, Dawood Hercules, Faysal Bank, Bank Al Habib, Cherat Cement, Fatima Fertiliser, Oil and Gas Development Company, Natio­nal Bank and Indus Motor.

Published in Dawn, August 20th, 2017