LAHORE: Last week the Pakistan Stock Exchange (PSX) shed 1,466 points and dropped below the physiological level of 40,000 points, while loses stood at 17 per cent. However, despite the rough week, the quarterly results season may hold some news for the PSX over the coming weeks.
Experts believe that the political hammering will not end but is expected to continue to have its toll on the market in the coming weeks; however, they are hopeful that some scrips may perform well and bring about a much-awaited change. Following the quarterly results season, fertiliser and auto sectors are expected to post healthy earnings growth due to the improved market conditions both locally and internationally, during the quarter.
Despite improved tax collection of 22 per cent and fiscal deficit for Q1 FY2017-18 at a 10-year low of 0.9 per cent of the GDP, Rs 324 billion, investors seem to have been distant from the market as their confidence was shaken amidst the political drama.
Last week started with ECC announcing a number of key developments including imposition and enhancement of regulatory duty on around 297 items as a fresh revenue measure, extension and clarity of textile export package, and deregulation of HSD and revision of OMC margins. Likewise, the National Refinery Ltd (NRL) announced the commencement of its isomerisation unit which attracted investor’s interest in the stock, during the week. Despite the negative vibe, the week concluded on a positive note with PM’s inaugural of Jhandial well, which is one of the largest oil and gas discovery, while Foreign Direct Investment (FDI) recorded an increase of 154 per cent during last month.
However, the army chief voiced his concerns over the failing macroeconomic indicators, while the State Bank of Pakistan (SBP) in its annual report also admitted to external and fiscal accounts pressures. World Bank in its report too painted a dismal picture of the county’s external balance.
Rumors of the unsuccessful meeting between the cement manufacturers also contributed in shattering the investors’ confidence. Additionally, remittances data showed a decline of 20 per cent to $ 1.29 billion, pushing the Rupee down, with the State Bank of Pakistan (SBP) eventually intervening by calling an emergency meeting of the exchange companies.
In participation terms, K-Electric emerged as the volume leader during the week, driven by clarity on Multi Year Tariff (MYT) released by NEPRA, whereby the new tariff has been approved at slightly above the tariff finalised earlier. Overall participation improved ADTO depicting increase of 4 per cent to 146 million shares while ADTV slipped 16 per cent to $ 59 million depicting tilt towards second and third tier stocks.
Mutual funds, individuals and brokers were net sellers with a cumulative outflow of $ 36.5 million. On the other hand, foreigners swiped the market, taking advantage of multi-year low trade value seen in most of the blue chips, with a total net inflow of $ 38.9 million.
