KARACHI: The outgoing week turned out to be another disappointing period for the investors where shares suffered heavy beating, leading to the KSE-100 index bleeding by 887 points (2.1 per cent) and settle at 40,855 points.

The decline during the week eroded all of the gains made post the general elections. The absence of clarity on economic policymaking, prime minister’s approval of Oil and Gas Regulatory Authority’s proposal for gas price hike by 46pc and downward trend in the international oil prices that kept oil and gas exploration companies in the red, provided all the ingredients for a perfect bear market. On the political front, the week began with the news of $300 million cut in military aid by the US.

The dullness prevailing in the market was manifest in the average daily traded volume which declined 22pc over the preceding week to 139 million shares while the average traded value slipped 36pc to $61m. Leaders for the week were Bank of Punjab at 57.4m shares, K-Electric 54.3m, Agritech Ltd 35.9m and Engro Polymer and Chemicals 30.7m.

Foreign investors sold $9.8m worth of equity during the week, close to their selloff of $10m the preceding week. It took the foreign selling to $274.7m for 2018 to-date. Outflow during the week was noted from banks at $5.8m and cement $3m. Among local participants, brokers’ proprietary account showed disposal of shares at $5.1m and companies $1.6m. Individuals, on the other hand, absorbed $6.2m while insurance companies bought equity worth $8.6m.

Sector-wise, cement, steel, textile, fertiliser and chemicals were deeply dented by the possibility of a hefty rise in gas and electricity prices. The lead negative contributor was cement which wiped off 169 points from the index, driven also by the depressing off-take numbers.

Other sectors that dampened investor sentiments were fertilisers and food and personal care products. Among stocks, Lucky Cement was down 5.3pc, Dawood Hercules 6.3pc and DG Khan Cement 9.1pc, taking away 176 points. On the flip side, banks supported the index with an addition of 27 points and chemicals three points. The Sui twins appreciated on the back of proposed increase in gas prices which, if implemented, would go to improve their cash flows.

Going forward, market gurus peer at range-bound activity as the fag end of the result reason would shift investors’ focus on government’s move to grapple with the looming economic problems.

The market is likely to monitor closely the policy decisions on hike in gas and electricity prices by the Economic Coordination Committee in its meeting early next week and the steps to curtail external account deficit, replenish foreign exchange reserves and address the rising circular debt. Several market participants reckoned investors to remain on the sidelines and scoop only to cherrypick high-dividend yielding safer blue chips, at dips.

Key news flow for the week included decline in State Bank reserves by $342m to clock in at $9.88 billion and the central bank planning to auction Rs5.15 trillion worth of market treasury bills and Pakistan Investment Bonds during September-November.

Published in Dawn, September 9th, 2018