KARACHI: The market continued to stay in the bearish zone with the benchmark KSE-100 index shedding another 437 points to close at 42,642, down 1 percent week-on-week ( WoW).
The prevalent bearish spell continued to be led by unresolved matters on the political and economic front.
During the outgoing week, local bourse witnessed a roller coaster ride, as KSE-100 witnessed 2017 till date lows of 41,984 points; however it later recovered to close the week at 42,642, down by a meager 1 percent WoW.
Major news dominating the market sentiments was the announcement of Afghan policy by US President Donald Trump’s newly led administration blaming Pakistan for US’ failure in the region – hinting towards possible cuts in Coalition Support Fund (CSF) payments going forward.
Moreover, deteriorating economic indicators of the country, where current account deficit for the month of July jumped by 3xYoY to $2 billion or 7 percent of Gross Domestic Product (GDP), further heightened concerns over potential depreciation of Pakistani Rupee, said Elixir Research’s analyst.
Pakistani Rupee depreciated by over 1.4 percent in the open market during the final trading hours on Friday, to close at Rs107.6 against US Dollar vs Pakistani Rupee 106.0 the previous day.
The analyst projects that Pakistani Rupee is likely to depreciate by 6-9 percent during Fiscal Year 2017-18 (FY18).
“With Friay’s episode of weakness in the currency (in open market), investors should continue to tilt their investment portfolios towards sectors that stand to benefit the most in this environment”, he added.
Market participants opted value hunting approach during the outgoing week, as banking stocks led by Habib Bank (HBL), United Bank (UBL) and Bank Al-Habib (BAHL) cumulatively contributed 192 points to the KSE-100 Index. Pakistan Petroleum (PPL) and Pakistan Oilfields (POL) also continued to defy the broader market direction and added to their gains as local investors opted to hedge their investment portfolios with dollar hedged stocks.
On the flip side, Lucky Cement (LUCK) and D. G. Khan Cement (DGKC) dragged the benchmark index by 160 points as both the companies are exposed to the risk of possible cement price attrition in the Southern region owing to substantial upcoming capacity addition of 5.25 million tpa (61 percent of existing capacity).
Average trading volumes dropped by 10 percent WoW to 165 million shares this week (from 184 million shares last week). Major trading volume was witnessed in small cap stocks led by Azgard Nine (ANL: 74.7mn shares), Aisha Steel (ASL: 41.6mn shares) TRG Pakistan (TRG: 74.8mn shares) and Bank of Punjab (BOP: 41.8mn shares).
Foreigners’ remained net sellers, offloading $9.7 million worth of shares, whereas domestic mutual funds and banks mopped up shares worth $3.1 million and $12.5 million, respectively.
