Stock market likely to remain lacklustre next week

LAHORE: The market is likely to remain lacklustre next week as investors are likely to focus on the outcome of the amnesty scheme beside possible political set up post elections, experts believe.

Market experts believe that investors’ focus would shift towards dominating economic front. Information stream on foreign exchange inflows and possible extension of the tax amnesty scheme, in case of less than encouraging response, would be key areas of interest.

In addition, experts say, portfolio rebalancing by local funds could swing momentum accordingly with start of the new fiscal year. Whereas, last week marked the end of trading activity in fiscal 2018 by delivering the first negative return of 10 per cent since fiscal 2009. The week started on a weak note with negative momentum from previous week extended in the initial trading sessions.

Moreover, the much-awaited decision by the Financial Action Task Force (FATF) finally unveiled with Pakistan’s name placed in FATF’s grey list for about 15-months, however, failed to dent sentiments at the local bourse as Pakistan’s greylisting was largely expected and as a result, the market rose 274 points to close the week at 41,911 points level.

FATF’s greylisting episode once again came into play with varying news flows setting market direction accordingly in the last week. Trading activity at the bourse marginally improved during the week, with average daily turnover increasing to 181.58 million shares

On the international front, OPEC members decided to raise oil output by 1million bbl per day in order to avoid a supply shortage which was lower than the initial guideline. As a result, the oil and gas sector ended the week in green by 0.7 per cent. Top performers during the week included industrial metals and mining that gained 3.9 per cent, engineering 2.3 per cent and electricity 1.8 per cent. Market activity rose during the week amidst increased focus towards 2nd tier and 3rd tier scrips as average daily turnover expanded to 7 per cent while average daily trading volume contracted 1 per cent.

On the macro front, State Bank of Pakistan’s (SBP) foreign exchange reserves fell by $602 million to end the week at $9.7 billion, whereas, total foreign exchange reserves of the country stood at $16.2 billion.

Foreign investors remained net sellers in all sectors and net sold equities marked at $15.5 million during the week. Most of the selling witnessed in banks for $8.6 million, cement $2.0 million and oil and gas $1.6 million.

Amongst specific scrips, ISL ended the week gaining 3.9 per cent as the company announced the commencement of commercial operations of its new cold rolling mill. In addition, Lucky Electric Power Company, a wholly owned subsidiary of LUCK, announced the financial close of its $885 million, 660MW coal-fired power at Port Qasim. LUCK ended the week by gaining a marginal 1.5 per cent as concerns over energy prices likely overshadowed investor sentiment.

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