Political protests gaining attention in stock market

A planned anti-government protest by the opposition political parties over the weekend looms large on the radar of stock market, with investors wary the resulting pressures on already limping economy will be one of many consequences, dealers said.

They added that investors have fought hard to keep the index on the green zone as the political noise and FATF decision were the stumbling block to score big in the outgoing week. “The market in coming week expected to move accordingly with political and other happenings,” a dealer said.

Analysts said the FATF wordings and indication how much far behind the country has been to fulfill the conditions put immense pressure with the week started by losing 785 points. “Moreover cross border tensions and political noise further dampened the mood of the investors,” an analyst said.

However, value hunters took this as a buying opportunity.

The Pakistan Stock Exchange’s benchmark KSE-100 shares lost 213 points in the outgoing week or 0.6 percent to finish at 33,657 points. Average trading volume for the week was down by 11 percent to around average daily volume clocking at 125 million shares.

Another factor which turned tables allowing the index to close on positive zone was the T-bill auction. The 12-month T-bill cut-off yield dropped by 68 bps to 12.79 percent, which showed that in the near-term there has been likelihood that interest rate might see some reversal.

The outgoing week remained dominated by results of various companies where auto and cement companies posted losses larger than the market expectations. Maple Leaf Cement, DG Khan Cement and Pak Suzuki Motors lost 6 percent to 9 percent in their share prices.

Rather refreshingly, Pakistan has been improving ranks on the global scale and the country climbed 28 places on the Ease of Doing Business index.

“All in all, the equity market is in dire need of material triggers to give direction and increase investor participation,” said analyst Ali Zaidi at JS.

Dealers said result season to continue to drive the market momentum in week ahead. While Banks and E&Ps will continue to likely post decent results, cyclical sector are likely to be challenged by the general economic slowdown and higher finance costs. On the political front, the planned sit-in in Islamabad next week may affect market sentiments

On the economic front, narrowing current account deficit and improving foreign reserves serves as a good omen for overall confidence in the market. “With the result season continuing next week, we expect activity to be influenced accordingly,” another dealer said.

Sector-wise negative contributions came from i) Commercial Banks (108 points), ii) Cement (104 points), and iii) Power Generation & Distribution (76 points).

Whereas positive contributions were led by i) Oil & Gas Exploration Companies (118 points), ii) Food & Personal Care Products (47 points) and iii) Fertilizer (30 points).