LAHORE: Investors at the Pakistan Stock Exchange (PSX) had a mixed month of February. Political uncertainties mostly led investor confidence amongst a severe lack of triggers. Political bearings had the most profound impact on market sentiments this month as the market was down 1.8 per cent MoM with key developments including, the Supreme Court (SC) declaring Nawaz Sharif ineligible to continue as party head while dismissing all political actions taken by him effectively after the Panama case verdict and by the inclusion of Pakistan in FATF’s watch-list.
These in combination with event-based negativity in key sectors, including the increase in minimum pension amount to Rs8000 per month for bank retirees by SC and imposition of windfall levy on certain licenses in Oil and Gas space and the unabated foreign selling with net outflow of $32.1 million in February 2018 further marred index performance.
Result season was in full swing during the month however it failed to create much excitement with major sectors reporting below expected earnings performance. Similarly, performance at the mainboard remained dismal with major sectors ending in red.
According to market analysts with the market moving past some its biggest flashpoints for risk, political clarity particularly post Senate elections on March 3 should dilute concerns for the market, going forward.
However, approaching deadline for pending decisions on various references against ex-PM can heighten risk perception, anal the st added. MPS announcement is another key event to track where higher than expected inflation number can prompt another rate hike, bringing the index-heavy banking sector in limelight.
Sector wise performance at the mainboard remained dismal with major sectors ending in red. Notably, automobiles were down 7.1 per cent MoM on currency devaluation concerns while Cements lost 6.1 per cent MoM on subpar earnings performance as higher coal prices restricted margin growth. Legal impediments impacted price performance for Pharmaceuticals were down 5.3 per cent MoM on an ongoing case pertaining to revision of drug prices and commercial banks were down 1.3 per cent MoM on unfavorable pension case decision. Other laggards included Fertilisers (down 2.1 per cent MoM), Textiles (down 1.1 per cent MoM) and Oil and Gas (-1.0 per cent MoM).
Foreign selling remained a key feature as part of a global pull-out strategy in the backdrop of a hawkish Fed rate outlook, foreigners resorted to booking profits in February 2018, selling $32.1mn (net) worth equities during the month. Majority of the selling was concentrated in Commercial banks (net outflow: $21.4mn) and Oil and Gas Exploration sectors (net outflow: US$10.1mn). On the local front, Insurance companies (net inflow: US$38.1mn) and Companies (net inflow: US$7.7mn) were active on the buying side.
Market analyst told Pakistan Today that the recent senate elections are likely to have a positive impact on the market. Despite all the political uncertainty, the business community does see this government as a business friendly and hopefully March would turn out to be better for the markets.