Stocks hinge on politics; earnings in marginal focus

Market is likely to remain volatile with thin participation during the coming week as investors are on tenterhooks and awaiting a court’s decision on Panama Papers case, while they may be unmoved by earnings season, dealers said.

Pakistan Stock Exchange (PSX) gained 2.1 percent during the week ended July 21 albeit with low volumes as the market participants remained on the sidelines awaiting conclusion on the Supreme Court proceedings.

Analyst Faizan Ahmed at JS Global said the outgoing weak witnessed a slight upward correction following a selling rampage over the last few weeks as value buyers jumped in to take positions ahead of the corporate results season.

“Most investors still remain sidelined from the market amidst political uncertainty,” Ahmed added.

The KSE 100-share Index of PSX gained 2.15 percent or 956.95 points to close the week at 45,294.39 points. KSE 30-share Index rose 2.33 percent or 537.49 points to end at 23,639.59 points.

BIPL Securities, in a report, said the week started on a dull note with investors tracking Supreme Court’s proceedings on a graft case against the incumbent government.  “Exchange of statements and submission of documents by the defendant induced uncertainty in local bourse,” added the brokerage.

Market participation remained thin as average volume fell 23.3 percent to 134 million shares/day. Foreign portfolio investors emerged as net sellers offloading equities worth $2 million during the outgoing week.

Amongst the key sectors, Oil and Gas exploration up 5 percent, auto rising 5 percent and oil marketing companies increasing 4 percent were the top gainers.

Analysts said value hunting in blue-chips drove the participants. Oil and Gas Development Company, United Bank and Pakistan Petroleum contributed 100, 69 and 66 points, respectively to the Index.

Textile weaving down 5 percent, power generation falling 1 percent and chemical decreasing 1 percent were the top losers.

The market remained positive on the back of net buying from insurance companies and banks and development finance institutions with a net inflow of $9 million and $0.7 million, respectively.

Amidst the political turmoil, individuals and foreigners remained net sellers with $5.7 million and $2 million outflows, respectively.

News that affected the market during the week included current account deficit of $1.4 billion in June, petroleum imports soaring 30 percent to $10.9 billion in 2016/17, large scale manufacturing surging 6.3 percent in May, government decision to maintain current rupee-dollar parity, its approval to export of 0.3 million tonnes of sugar, and Rs10/litre rise in packaged milk price.