Volatility taking toll on stock market
KARACHI: The KSE-100 index dropped 437 points (one per cent) in the outgoing week to settle at 42,642 points.
Major reasons for the weak sentiments on the bourse included political uncertainty, rising concerns on the current account deficit and worsening US-Pakistan diplomatic relations, according to analysts at Arif Habib Ltd.
“It appears that market participants have overplayed the volatile elements at play,” they said in their weekly stock review.
Net selling by foreign investors was $9.7 million against $2m last week. Brokers were net sellers of shares worth $8.9m while banks’ net buying was $12.5m, mutual funds $3.1m and companies $2.6m.
Foreign interest remained lacklustre in view of heightened concerns about currency depreciation and political instability whereas net outflows during the week were $9.7m versus $2.04m in the preceding week, AKD Securities said.
Cement stocks created further volatility as major scrips, such as Lucky Cement and DG Khan Cement, took a beating. Cement-makers in the north zone cut prices by Rs20-25 per bag, hence contributing 261 points to the index decline.
Other sectors that pulled the market down were fertiliser, which decreased 84 points, technology and communication 56 points, oil and gas marketing companies 52 points and cable and electrical goods 43 points.
The average daily turnover decreased over 2pc from the preceding week to almost 180m shares. The traded value decreased 1.4pc to $92m on a weekly basis.
Volume leaders included TRG Pakistan with 74.85m shares, Azgard Nine 74.76m shares, K-Electric 43.21m shares, Bank of Punjab 41.81m shares and Aisha Steel Mills 41.69m shares.
Major gainers were Amreli Steels, which went up 7pc week-on-week, Pakistan Oilfields 5.42pc, Nishat Mills 4.5pc, Pakistan Petroleum 3.1pc and Indus Motor Company 2.97pc. Major laggards were Engro Foods, which decreased 9pc, DG Khan Cement 8.5pc, Pioneer Cement 6.8pc and Gharibwal Cement 6.5pc.
Arif Habib Ltd expects the stock market to remain range-bound next week amidst lack of activity in view of upcoming Eid holidays. “We reiterate our stance on the market whereby valuations have opened up to stunning levels,” they said.
But AKD Securities warned investors that the market may remain volatile with thin volumes and bearish momentum continuing because of political tensions.
Upcoming financial results that are going to affect the investor sentiment next week include Amreli Steels, Hi-Tech Lubricants, Pakistan Stock Exchange, Hascol Petroleum, Ferozsons Laboratories, Descon Oxychem and Synthetic Products Enterprises.
Published in Dawn, August 27th, 2017