Investors eye healthy results to offset losses

Bulls may find rescuer in forthcoming results to buoy stocks sagged by waves of panic selling in days ahead; although political insecurity is likely to damp positive thrusts, dealers said.  

Stocks tumbled during the week ended August 18 amid thin volumes as the market remained cautious due to continued political uncertainty and fragile local currency.

The KSE 100-share Index of Pakistan Stock Exchange lost 4.88 percent or 2,210.11 points to close the outgoing 4-day week at 43,078.38 points. KSE 30-share Index shed 4.9 percent or 1,148.92 points to end the week at 22,198.65 points.

“Uncertain political outlook and concerns over economy and currency continued to take toll on the market as the benchmark KSE-100 index made a new 2017 intraday low on Friday,” said Faizan Ahmed, an analyst at JS Global Capital.

Analysts said mutual funds were keen to rebalance their portfolios to adjust with tumultuous political and economic climate. Banks and individuals, however, took advantage of weak asset prices in hopes of capturing benefits of relentless selling.

In the backdrop of overall uncertainty, participation dried in the market, which can be attributed to receding investor’s confidence, as average daily trading volumes decreased 3.4 percent to 183 million shares. Foreigners’ net selling eased off this week with aggregate net selling of $2 million significantly down from the previous week’s $31.2 million. Almost all the listed sectors remained under pressure with the key sectors, such as cement down 6.9 percent, oil and marketing companies dropping 4.5 percent, automobile sliding 8.1 percent and fertiliser falling 4.9 percent.

During the week, Maple Leaf Cement announced to issue 12.5 percent right shares to finance expansion in its production capacity. Siddiqsons Energy Limited said it would relocate its coal fired plant to Thar to contain transportation cost. On the macro front, country’s foreign exchange reserves declined $62 million to $19.94 billion. Service exports, however, grew 1.67 percent and foreign direct investment posted a remarkable growth of 163 percent in July.

Elixir Securities, in a report, said there has been a foreign selling of $426 million so far this year compared with $361 million in 2016.  “Political uncertainty has brought additional pressure,” the brokerage added. “We expect the market to remain range bound amid lacklustre volume, although individual stocks could perform as we go through results season.” The results to track for the next week include Bank Al-Habib, Kot Addu Power Company, Cherat Cement, Oil and Gas Development Company and National Bank of Pakistan.