Equities remain depressed

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SOURCEBusiness Recorder
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Pakistan Stock Exchange witnessed declining trend during the outgoing week ended on May 10, 2019 due to selling mainly by local investors. BRIndex100 lost 129.78 points on week-on-week basis to close at 3,627.17 points. Average daily volumes stood at 65.320 million shares. BRIndex30 decreased by 877.82 points to close at 18,621.31 points with total turnover of 47.420 million shares.

KSE-100 index declined by 1,406.42 points and closed the week at 34,716.53 points. Trading activities remained thin as average daily volume on ready counter decreased by 30.1 percent to 73.48 million shares as compared to previous week’s average of 105.09 million shares. Average daily trading value declined by 22.0 percent to Rs 3.19 billion.

The foreign investors remained net buyers of shares worth $10.3 million as compared to $4.8 million last week. Total market capitalization declined by Rs 245 billion to Rs 7.126 trillion.

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An analyst at AKD Securities said that continuing to succumb to wider macro and policy dissonance, with looming checkpoints (IMF negotiation, MSCI review and Budget FY20) increasingly imposing “risk-off” sentiment, showcased by the KSE-100 index slipping 3.9 percent on week-on-week basis.

Also Read: Stocks fall 147 points in range-bound trading

The leader board during the week included ENGRO (up 2.5 percent), BAFL (up 1.2 percent), HBL (up 1.1 percent) and PAEL (up 0.7 percent), whereas laggards were PSMC (down 17.4 percent), HASCOL (down 15.7 percent), MLCF (down 12.7 percent) and ASTL (down 10.3 percent).

An analyst at JS Global Capital said yet another week, yet another case (6th consecutive week) of the market shedding points! This time, the market fell 1,406 points or 3.9 percent) to close at 34,716, a level previously seen in May-2016. As has been the scenario over the recent past, this week too, the primary causal factor for a lacklustre market was economic uncertainty, which has recently been ramped up by a notch or two ahead of the IMF program and the Federal Budget FY20.

Recent news flows surrounding IMF and the associated conditions have not helped the market’s cause, suggesting inevitable belt-tightening measures such as further rupee devaluation, removal of special subsidies/concessions to various sectors, interest rate hikes, etc., which might be announced in the upcoming budget. Undoubtedly, the commencement of Ramazan from Tuesday this week also bore down on market activity.

On a sector-wise basis, it was almost entirely smeared in red, as all major sectors eked out negative returns. Cyclical sectors, such as automobiles (down 6.3 percent), cements (down 6.3 percent) and engineering (down 9.0 percent) were among the major underperformers during the week given the looming slowdown in economic growth and potential stabilization measures. Banks (down 1.2 percent) slightly outperformed the index, which is possibly on account of anticipation of an interest rate hike in the upcoming MPS at the end of the month.

(This news/article originally appeared in Business Recorder on May 13th, 2019)

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