Pakistan Stock Exchange witnesses dull week

During outgoing week, negative sentiments persisted as the index lost 335 points.

KARACHI (Dunya News) - The stock market for the second consecutive week moved in narrow band and showed listless performance where several key activities took place but investors at large stayed away with foreign selling pressure further dampened the mood mostly waiting for big economic development like tax cut and reduction in political temperature to help gear up the momentum.

It was a dull week for the benchmark index, where negative sentiments persisted as the index lost 335 points or 087 percent to close at 38,251 level.

An analyst from Topline Securities said that the investors preferred to remain on the back foot due to the bleak economic outlook and expected poor corporate earnings for the coming year. Even the announcement by the United Arab Emirates towards end of the week to deposit US$3bn in the State Bank of Pakistan, was unable to alter dreary outlook.

Foreigners’ selling for the week was $12.2 million dollars versus $12.9 million in the previous week. This was there 33rd week of consecutive selling. Among local investors’, mutual funds and Individuals were net buyers amounting to $7 million, cumulatively.

The news of the new “mini-budget” second by the new governmnet as a “money bill” next month remained the talk of the town, wherein, government is going to impose more taxes to bridge their revenue shortfall of Rs 100 billion in in five months of the current fiscal year. However, this includes a proposed increase in FED on cigarettes; imported vehicles and telecom services, and sales tax increase on petroleum products.

International oil prices continued to decline in the week under review due to the mammoth increase in supply from US and the on-going disputes between oil producing countries, this led to WTI closing at around $46.2/barrel (after touching a low of $45.6/barrel) and Brent at $54.7/barrel. Taking cues from this, local E&P companies closed in red during the week. Because of trimming of share values, index chipped off by around 374 points.

An analyst from Arif Habib Limited that year-end portfolio adjustment may trigger market activity in the upcoming days whereas updates on the judicial front have once again brought politics at the forefront which may also have an impact on the KSE-100 index.

In the medium term, we may expect some inflows from the UAE $3 billion and China $2 billion and as the country secures foreign financing from friendly countries in order to manage its twin deficits and dwindling foreign exchange reserves, confidence in the market may be restored. “While we expect potential help from the IMF would also reinstate confidence of other global lenders like the ADB and World Bank in the Pak economy”, he said.

“We expect the market to closely watch the developments on the economic front and index is more likely to remain in consolidation with limited activity in terms of volume”, said an analyst from Habib MetroFinance Securities. Therefore, we suggest investors to stay cautious and keep an eye on fundamentally strong stocks (rather than the whole index) for decent yields and long-term capital gains.

DETAILS BY HARIS ZAMIR