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Political woes, foreign selling sink shares

KARACHI: Although the initial shock of Donald Trump’s victory in US presidential election was absorbed by the stock market, other disconcerting factors such as the uncertainty over the outcome of Supreme Court hearing of Panamagate case, incessant foreign selling for the past 11 days and tensions on Line of Control kept investors on their toes and they decided to take profit.

All of that led the KSE-100 index register a decline of 524 points, or 1.2 per cent, during the week and it closed at 42,325 points on Friday.

Cumulatively, returns at the Pakistan Stock Exchange now stand at 6.1pc during this month compared to negative returns of 1.6pc the earlier month. Dealers at Intermarket Securities noted that the major contribution to the downside during the week came from Habib Bank which fell down 4.15pc, United Bank 4.58pc, Hub Power Company 3.43pc, Dawood Hercules 4.86pc and Pakistan State Oil 3.49pc. These stocks added up to a steep decline of 400 points in the outgoing week.

Overall participation during the week remained weak with average daily volume of traded shares falling 7pc week-on-week to 459 million shares, while average daily value dropped 25pc to Rs14 billion.

Analyst Faizan Ahmed at JS Global said overall activity remained concentrated in auto parts and accessories which gained 6.3pc week-on-week, followed by cements 5.8pc and commercial banks 1.1pc, with major activity in third-tier banks.

Foreigners stood out as net sellers of 47m worth stocks during the week. Aggregate foreign outflow during the 14 sessions of November amounts to a massive $75m, taking the year-to-date foreign selling at $133m. The outflow during the week was mainly from the cement sector at $15.86m. Local individuals and banks mainly absorbed the sell-off by the overseas investors.

Topline Securities identified three major gaining sectors during the outgoing week as transport, cements and commercial banks which rose 9.7pc, 5.8pc and 1.1pc, respectively. In contrast, three main losers were power generation, food and personal care and automobile assemblers, declining 1.9pc, 1.8pc and 0.6pc.

“Low urea prices and plant shutdown resulted in subdued performance of fertiliser and power generation sectors,” according to Spectrum Securities.

According to AKD Securities, top gaining stocks for the week were Hascol Petroleum which was up 13.01pc, Engro Polymer 7.35pc, Pioneer Cement 5.71pc, Cherat Cement 2.66pc and Nishat Chunian 2.25pc. Scrips that ended deep in the red zone included Indus Motors which was down 6pc week-on-week, ICI Pakistan 4.56pc, Amreli Steels 4.12pc, Sui Southern Gas Company 3.95pc and Dawood Hercules 3.67pc.

One of the major developments during the week was deletion of two stocks from MSCI Provisional Pakistan Index. Other news flow for the week included: Vitol announced plans to acquire another 10pc stake in Hascol Petroleum exercising its call option that would take cumulative holding to 25pc; Oman Telecommunications’ chief reiterated plans to sell the company’s controlling stake in WorldCall Telecom; Lucky Electric Power Company revised proposal for its planned 660-megawatt power plant following a shift in fuel source to local coal with the Engineering, Procurement, and Construction (EPC) arrangement expected to be finalised by next month; and the Sindh Engro Coal Mining Company expects to begin commercial operations for its 660MW Thar coal-fired power project by June 2019.

OUTLOOK: In the upcoming week, the market was expected to remain range-bound. “Foreign outflows, strains in the Pakistan-India relationship and new developments in the Panama Papers leaks case hearing will play a vital role in determining market trajectory,” analysts at Arif Habib Ltd said.

BMA Capital projected resistance and range-bound trading going forward considering that the KSE-100 index was trading near its all-time high level. Investor participation was likely to remain concentrated in fundamentally strong stocks.

Courtesy : Dawn News



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