Pak-India tension to keep buyers on tenterhooks

Futures roll-over next week and simmering tension between Pakistan and India may keep the investors on tenterhooks and therefore stocks are likely to take a roller coaster ride, dealers said.   

KASB Securities, in a report, said volatility is expected to continue next week as the situation between Pakistan and India is expected to remain fragile, while local politics is likely to heat up. “Futures roll-over week may also keep the investors edgy,” said the report.

Stocks closed lower amid political uncertainty, while the current week witnessed 11-year high volumes and a year-high value. Lack of triggers and foreign investment outflows forced retail investors to focus small and mid-cap shares.

The benchmark 100-share Index of the Pakistan Stock Exchange closed down 1.44 percent or 581.73 points to 39,781.95 points.  

The average traded volume increased 5.3 percent week on week, while average traded value increased 17.9 percent. 

The KASB said the status quo maintained in the key policy rate of the State Bank of Pakistan may prove to be a non-event for the market. The rate was kept on hold at 5.75 percent.

Arif Habib Limited agreed that response of the bourse to the status quo is expected to largely remain muted. 

“In the near-term, the market may remain volatile attributable to political protests coupled with regional tensions,” it said. “However, we view the attention of investors to move towards the main board from second/third-tier stocks ahead of September quarter results.”

The brokerage said the foreign inflows will also determine the market sentiments.

Foreign institutional portfolio investment recorded an outflow of $16.04 million as compared to an outflow of $5.26 million during the last week. 

In July-August, foreign direct investment also fell 53 percent.

Analyst Faizan Ahmed at JS Research said the market witnessed correction during the outgoing week because of rising geopolitical tensions, which was further exacerbated by margin calls on leveraged positions. Topline Securities said tobacco was the top gainer over the week, up 5.3 percent, followed by cement and automobile assembler, which increased 1.4 percent and one percent respectively. 

Fertiliser and commercial banks sectors were among the top losers as they fell 4.6 percent and 1.7 percent, respectively. Urea prices decreased Rs150 to Rs1,200 a bag. 

Associated Services Limited, Honda Atlas Car, Millat Tractors, International Steel Limited and Orix Leasing were the major gainers, while Hum Network Limited, TRG Pakistan, Murree Brewery, Ghani Glass, and Jahangir Siddiqui and Co. were the major losers.