Stocks fall for sixth consecutive week on poor economic forecast

The capital market continued to decline for the sixth consecutive week on government projections of a slower economy during the current fiscal year, dealers said.

Pakistan equities continued their downward trend, shedding 643 points to finish at 38,307 points level. This is the lowest index level in 48 trading sessions. Out of the five trading sessions during the week, benchmark KSE-100 shares index managed to end in green in only one session.

Sector wise negative contributions came from commercial banks slipping by 149 points, cement by 120 points, oil and gas exploration companies by 109 points, and oil and gas marketing companies 76 points.

Whereas, sectors that contributed positively included tobacco, up 48 points, and textile composite, up seven points.

Foreign selling continued this week, clocking in at 15.6 million dollars compared to a net selling of 3.5 million dollars last week. Selling was witnessed in exploration and production amounting to 13.4 million dollars, and cement 1.5 million dollars.

On the domestic front, major buying was reported by insurance, 8.3 million dollars, and companies, 3.6 million dollars. Volumes during the week settled at 93 million shares, down by 18 percent whereas value traded arrived at 27 million dollars down by 21 percent on week on week basis.

A leading analyst said that in the new week, some support might surface following the arrival of healthy numbers of current account deficit. The current account deficit for February amounted to 356 million dollars as compared with the January number of 853 million dollars, a positive sign for economists.

This would help reduce the burden, but government’s hefty support to clear deck, raised in the shape of interest and debt payments.

In the first four trading sessions of the week, foreigners were net sellers of 17.7 million dollars versus net selling of 3.5 million dollars in the first four days of the previous week.

On the local investors’ side, insurance companies and banks were net buyers of 7.8 million dollars and four million dollars, respectively.

An analyst from Habib Metro-Financial Services said the equity market was expected to remain inconsistent and depressed for the near-term amidst concerns on the macroeconomic front, investors were therefore recommended to maintain standby liquidity and cherry pick fundamentally strong scrips.

An analyst from Arif Habib Limited said the key near-term events include visit of the Malaysian premier on Pakistan Day (Marach 23, 2019), as well as the State Bank of Pakistan’s monetary policy this month.

“On the stock market front, we expect the bourse to remain range bound next week due to delay in the IMF agreement and suggest market participants to invest in blue chip scrips on dips,” the analyst added.

BMA Capital Management in its weekly roundup said the upcoming week was expected to remain focused on the Financial Action Task Force proceedings and progress towards the IMF program.

Investors were likely to align positions in wake of the monetary policy announcement expected by month end. Therefore, market participants should adopt a wait and see approach before making fresh allocations.