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Thursday March 28, 2024

Stocks break three-week losing streak to end higher

By Danyal Haris
May 27, 2018

Stocks made the most of a much-needed breather after continuously coughing up losses for three consecutive weeks, building decent gains on a fresh buying spree launched by banks, insurance companies, and some other financial institutions, dealers said.

Analysts said the three-week losing streak cumulatively dragged the index by 8.6 percent. “The market, however, bounced back as irresistible valuations pulled investors back in the market,” an analyst said.

The benchmark index closed at 42,074 index level, securing 451 points or 1.1 percent in outgoing week. Of five trading sessions, the first three ended positive drawing strength from factors like smooth sailing of federal budget and amnesty scheme in the parliament, clarity on general election dates, and Moody’s reaffirmation of Pakistan’s credit rating. The week was, however, not without turbulence on the political front as the ruling party and the largest opposition party failed to reach consensus on interim set-up. An analyst from Spectrum Securities said the negative sentiments that remained the order of the last two sessions were a mainly due to investors’ concerns over depleting foreign reserves and higher current account deficits.

Topline Securities in a report said the auto sector had been consistently underperforming as the government had barred non-filers from buying a new car, which was likely to hit the sales of the assemblers.

“Indus Motors has lost around 18 percent since budget announcement, while Honda Motors and Pak Suzuki Motors have shed 15 percent and 9 percent respectively,” the report said. Average volume during the week rose by 4 percent to 119 million shares, whereas Faysal Bank, PAEL, and Fauji Cement were the major volume leaders. On a weekly basis, the total capitalisation of All-Shares Index increased 1 percent, to $76.17 billion mainly on account of an increase in capitalisation of banks, up 2.1 percent, while exploration & production and food sectors gained 0.8 percent and 0.5 percent respectively. The sector-wise performance shows that commercial banks lifted the KSE-100 shares index by 212 points after Moody's reaffirmation of country’s credit profile as B3 stable.

During the week, foreigners were net sellers of $26.1 million worth of equties, while insurance companies, other organizations, and banks were net buyers of shares valuing $23.2 million, $7 million, and $4.3 million respectively. Spectrum Securities in a report said it was expecting the market to remain volatile next week due to the uncertainty over caretaker government, as the name of the interim prime minister was yet to be announced but the smooth transition of government would bring positivity in the market. “However, market volume will remain low due to Ramazan. Furthermore, we expect banking sector to perform bullish, while highly leveraged scripts will perform bearish next week,” the brokerage said.

The coming week, an analyst from BMA Capital said, was likely to remain unexciting as future of political set-up post elections, concerns on macro-economic front and the resultant potential reentry into International Monetary Fund program would continue to loom over investors. A consensus on interim setup and loan and deposit inflows may prove potential triggers for the market.

Moreover, a 50-basis-points increase in discount rate was broadly in-line with market consensus and hence may draw mixed reaction.