Political specter likely to spook investors into panic selling

Investors are likely to offload their risky holdings if revisiting political specter haunts the market that kept up momentum on foreign buying during the current week, dealers said.

The dealers said equities witnessed net foreign inflows of $49 million in January as rupee depreciated. They kept fingers crossed for the coming week.

They, however, said the scheduled protests by a religious party in support from an opposition political party from January 17 would prove a sentiment dampener.

Analysts believe if the protestors manage to show strong street power investors may continue to book profits.

Stocks managed to close up one percent during the week ended January 12, buoyed by a strong foreign institutional buying.

Analyst Faizan Ahmed at JS Global Capital said market took a positive start, but it lost some steam towards the end of the week with profit-taking witnessed at the higher levels.

“The news flows during the week centered on US-Pakistan relations with suggestions that Pakistan has suspended cooperation with the US, while threat of protests by a religious cleric Tahir-ul-Qadri too remained unsettling,” Ahmed added.

The KSE-100 shares index of Pakistan Stock Exchange gained 0.96 percent or 409.73 points to close the week at 42,933.72 points. KSE-30 shares index gained 0.99 percent or 213.06 points to end at 21,671.01 points.

Average daily volumes also remained high at 276 million shares as compared to 213 million shares during the last week, depicting a 30 percent increase.

Elixir Securities, in a report, said foreigners remained net buyers during all the trading sessions of the ongoing year as rupee depreciation and attractive valuations opened buying opportunities in the market. “However, political uncertainty dampened market exuberance, which resulted in profit-taking by domestic investors over the last two trading sessions of the week.

The unfortunate incidents in Kasur added fuel to the ongoing protests against the government.

Sui Northern Gas (up 18.7 percent) and Sui Southern Gas (rising 6.7 percent) and Crescent Steel (increasing 19 percent) garnered investor interest on economic coordination committee’s approving Rs175 billion for the third liquefied natural gas pipeline.

The top performer was fertiliser up 1.4 percent on expectation of a new fertiliser policy and/or measures to reduce urea prices in the country ahead of general elections.

The sectors, which remained the losers, included cement (down 0.5 percent), exploration and production (decreasing 1.5 percent) and auto (dropping 0.3 percent).

Other news that affected the market included World Bank’s growth forecasts of 5.5 percent and 5.8 percent for FY2018 and FY2019, respectively, a 25 percent increase in trade deficit to $18 billion in the first half, a 2.5 percent growth in remittances to $9.7 billion, a $134 million weekly fall in foreign exchange reserves and fiscal deficit of Rs826 billion in 5MFY2018.