PSX devoid of triggers; dull trade expected

Stocks are likely to remain range bound next week due to lack of triggers after closing lower 1.1 percent during the current week on political and economic instability, dealers said.

“Next week we expect the market to remain range bound due to a lack of triggers,” Arif Habib Ltd said in a report. “We expect E&Ps (exploration and production) sector to remain in the limelight as a result of rupee devaluation.” The benchmark KSE 100 index of Pakistan Stock Exchange (PSX) witnessed a bearish momentum and fell 434 points or 1.1 percent to 38,646 points, lowest in 76 weeks, as against 39,080 points last week. Foreign investors sold stocks worth $8.9 million this week as compared to net buying of one million dollars last week.

Selling was concentrated in commercial banks ($13.1 million), other sector ($2.4 million), telecom ($2.3 million) and cement ($2 million). On the local front, banks and development finance institution, companies and mutual funds remained the buyer of $11.3 million, $10.7 million and $6.6 million, respectively. The week started off with a negative sentiment amid uncertainty pertaining to rupee devaluation along with the political turmoil, according to Arif Habib Ltd. However, skepticism on parliament completing the term raised by National Assembly’s speaker shook the investor confidence and market nosedived 1.5 percent day on day.

However, there was a revival in the market on Friday as the Supreme Court rejected re-opening of Hudaibiya Paper Mills case, Imran Khan’s protection from disqualification and rupee stability at 110.

Other major news affecting the market included Engro to supply additional 200 million metric cubic feet/day gas to Sui Southern Gas Company, new cement units proposed to be banned in Potohar, Oil and Gas Regulatory Authority’s assurance that the proposed tariff regime would not impact market shares of gas utilities, power plants to resume production on furnace oil and Kapco’s share purchase agreement with Dawood Hercules falling apart.

Trade deficit jumped 29 percent year on year to $15 billion in 5MFY17 owing to 21 percent surge in imports to $19.9 billion compared to 10 percent growth in exports to $8.2 billion. Elixir Securities, in a report, said the index posted a strong recovery on the final day of the week as the market welcomed Supreme Court’s decision of not opening Hudaibiya Paper Mill case (against Sharif family), which could have alleviated the political uncertainty.

“However for next week, we flag risks related to Pakistan Awami Tehreek’s protests against ruling party,” the brokerage said. Negative contributions to the market came from the sectors, such as cement (down 215 points), engineering (dropping 83 points), oil marketing companies (dipping 53 points), automobile assembler (falling 52 points) and pharmaceutical (sliding 45 points). Stocks that contributed to the Index’s downturn included Luck (down 103 points), ISL (dropping 44 points), DGKC (declining 43 points), SEARL (dipping 34 points) and UBL (falling 32 points). Positive contributions came from PPL (up 51 points) due to rupee devaluation, Engro (increasing 50 points) and HBL (rising 41 points).