Market Weekly: A volatile week for PSX, settles 930 points down WoW

Index sheds 2 per cent, lowest close in 74 weeks amid uncertainty

LAHORE: Pakistan’s benchmark KSE-100 index fell 2.3 per cent or 930 points week on week basis to close above 39,000 mark, PSX’s lowest weekly closing in 74 weeks. The resurgence of domestic political noise where market sensed a likely repeat of 2014-esque sit-ins by certain opposition parties given release of inquiry report, recent statements by their top politicos, and precedence already set by religious parties’ earlier sit-ins, had dented sentiments during the week.

After a volatile day on Thursday, the Pakistan Stock Exchange closed 17-month low at 38,784 amid the rising tension between Pakistan and US following the announcement of American President Donald Trump to shift the US Embassy in Jerusalem. The investors lost Rs 178 billion during a day trading as the market capital stood at Rs 8.257 trillion compared to Rs 8.435 trillion a day ago.

Meanwhile, 2017’s favourite gas marketing Sui Company got a reality check when OGRA proposed new tariffs that may reduce their profitability. Oil prices took a mid-week dip as well as US gasoline inventories came in higher than expected, while PSX’s new proposals for circuit breakers also rattled retail investors.

Some respite was witnessed on Friday where PKR slipped against USD to Rs 107 and triggered some buying in hedge/export sectors like E&Ps, IPPs, Textiles and Tech.

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Stocks including HBL (-4 per cent week on week basis), KAPCO (-14 per cent), SNGP (-13 per cent), UBL (-4 per cent) and PSO (-7 per cent) held 404 points from the index, while PPL (+4 per cent), NESTLE (+11 per cent), PAKT (+6 per cent), NATF (+10 per cent) and DAWH (+2 per cent) added 188 points.

On the sector front; Cable and Electrical shed 8 per cent, OMCs and Refineries were down 7 per cent apiece, while E&Ps gained 1 per cent, Tobacco was up 4 per cent, and Food surged 7 per cent.

Friday brought some relief after the KSE 100 shed 1,100 points, as foreigners bought $ 1.0 million during the week compared to selling of $ 39.5 million last week. It is crucial to be noted here that a lot of foreign fund managers have been waiting for PKR to depreciate. It served as a good signal for the market.

Despite the steep decline on during the week, Topline Securities Analyst Adnan Sheikh while following up on his comments to Profit earlier on Thursday, “I wonder if KSE 100 is ‘good buy’ or ‘bye-bye’ at this level”, said, “Ultimately Friday has been a good buy for those who bought in the steep dip”. Following the political scenario the market may continue to be unstable however is set to recover in the coming weeks.

On the local front, Insurance sector was net buyers of $ 6.4 million whereas individuals were net sellers of $ 9.7 million.

Meanwhile, on Friday, US dollar rate started stabilising after deteriorating unexpectedly in the interbank market. After shooting to Rs 108.5 in the morning, the dollar was being traded for Rs 105.8 in the interbank market around noon, which later on closed at Rs 107. SBP is of the view that this market-driven adjustment in the exchange rate will contain the imbalance in the external account and sustain higher growth trajectory.

Kot Addu Power (KAPCO) and Dawood Hercules (DAWH), in separate notices to the bourse, have mutually agreed to terminate the share purchase agreements (SPA) and further processing of the transaction for the acquisition of Hub Power (HUBC). Sazgar Engineering Works (SAZEW) reported to PSX production of 1,769 units compared to sales of 1,770 units of auto rickshaw for November 2017. Synthetic Products Enterprises (SPEL) informed PSX that trial production at newly constructed Rahim Yar Khan Facility has started. Azgard Nine (ANL) was ordered by Lahore High Court to hold election of directors within 1 month based on current shareholding.

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Eleazar Bhatti
The writer currently serves as the Content Manager at Profit by Pakistan Today and is an economics graduate from Leeds Business School in the UK. He can be reached at [email protected] or at twitter.com/eleazarbhatti.
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