Stocks may remain range-bound in rollover week

Stocks may remain range-bound during the next rollover week, while the end of result season and political disturbance would keep investors on the sidelines, dealers said.

Stocks closed flat for the week ended September 22 as rising political noise offset the excitement generated by net foreign inflows.

“KSE-100 index went nowhere during the outgoing week as investors were in search of sunrise as political clouds rebuilt,” Adnan Sami, an analyst at Topline Securities said. “Market participation improved as investors looked to gamble in penny stocks.”

The KSE 100-share Index of Pakistan Stock Exchange shed 0.08 percent or 36.99 points to close at 42,750.20 points. KSE 30-share Index fell 0.44 percent or 98.54 points to end the week at 21,881.04 points.

“The benchmark index gained 560 points in the first three days of the week due to elation on foreign buying and improvement in current account deficit in July,” Elixir Securities said in a report. “However, political developments with regards to the Model Town Case and NAB’s (National Accountability Bureau) action against Finance Minister Ishaq Dar thrashed the returns in the latter part of the week.”

Average trading volume remained dull, but inched up by nine percent to 171 million shares during the week.

Arif Habib Limited (AHL), in a report, said the benchmark index, in the first three days, carried forward the positive momentum of the preceding week on foreign buying. 

There was a foreign net buying of $0.4 million during the week as compared to $27.7 million in the previous week. Foreign buying was concentrated in fertiliser sector in line with the global rally sparked by higher prices followed by oil marketing companies.

“However, on Thursday and Friday the market cumulatively lost 597 points primarily on account of political uncertainty led by the Lahore High Court’s order to make the Model Town incident inquiry public coupled with bailable warrants issued against the finance minister,” AHL added.

News, which cushioned the market, was the current account deficit contracting 73 percent in August, power generation surging 19 percent, large scale manufacturing sector posting a 13 percent growth in July and international urea prices rising to $252/tonne from $240/tonne a week earlier.

Refinery sector was up four percent, led by National Refinery Limited (up 5 percent) and Attock Refinery (rising 3 percent). Pharmaceutical and fertiliser sectors gained 3 percent apiece, while food sector rose 2 percent.

In contrast, cement sector slid 3 percent, exploration and production sector fell a percent while banks closed flat at 0.3 percent.