KARACHI: The stock market snapped six-week winning streak in the outgoing week with the KSE-100 index posting a loss of 250 points (0.56 per cent) and closed at 44,301. Trading was dominated by profit-booking.

The correction momentum that had surfaced towards the end of the preceding week continued for the first three days of the outgoing week. The interest rate hike by 25 basis points announced by the State Bank of Pakistan the week earlier had triggered negative sentiments in highly leveraged sectors such as cement and fertiliser while investors also decided to stay cautious due to the ongoing results season.

Some market players believed that the oil price sustaining at three-year high of $65 barrel and decent earnings season were overshadowed by foreign selling throughout the week.

Foreign investors, mainly corporates, sold stocks worth $12.62 million during the week against net buying of shares worth $12.40m. Some other market watchers thought that the emerging clarity on the political front, controlled consumer price index for January (clocking in at 4.42pc) and bullish sentiments in commercial banks helped mitigate the foreign portfolio outflows during the week.

On the domestic front, net buying of stocks worth $12.62m was observed, led by individuals and ‘other organisations’ purchasing shares of $6.29m and $6.26m respectively. Banks booked profit by selling stocks valued at $12.1m.

Investor participation during the week was subdued, representing a decrease of 7.3pc in the average volume, registering 255m shares. The average traded value was recorded at $89.8m, down 22pc week-on-week with WorldCall Telecom at 93m shares, Lotte Chemical 90m, Dewan Cement 89m and Fauji Fertiliser 61m, as the leaders.

Buoyed by the surprise increase in interest rate by the SBP, commercial banks were bullish on Monday with a number of small and mid-cap banks closing on their ‘upper circuits’. However, such positivity proved short-lived as it was countered by profit taking in the sector throughout the week on rumours regarding adverse decision by the Supreme Court against large banks in the pension case.

Sector-wise, major drags to the index were commercial banks, down 181 points, on account of profit-taking across the sector and cements 160.6 points due to concerns of further decline in cement prices in the north region.

Conversely, fertilisers contributed 45.2 points on the back of lower inventory and higher urea prices and pharmaceutical added 43.4 points on intimation of price increases. Scrip-wise, the laggards included United Bank, decreasing by132.2 points, Lucky Cement 69.1 points, Habib Bamk 67.3 points and MCB Bank 62.5 points. On the other hand, positive contributions were made by Dawood Hercules, increasing 43.7 points, Bank Al Habib 36.5 points and Mari Petroleum 29.4 points. Among stocks followed by AKD Securities, the best performers were Bank Alfalah, up 4.1pc week-on-week, Attock Petroleum 2.2pc, Pakistan State Oil 1.7pc and Pakistan Telecom 1.6pc whereas decliners were Maple Leaf Cement, down 8.2pc, Gharibwal Cement 7.2pc, United Bank 6.4pc and Lucky Cement 3.9pc.

Major news included Drug Regulatory Authority’s notification of upward revisions in drug prices with upward revisions in accordance with the Drug Pricing Policy 2015; increase in the petrol price by Rs2.98 and diesel price by Rs5.92 from Feb 1; Hascol reaching settlement with Mena Energy and Dawood Hercules accepting offer for HUBCO stake sale;

Outlook: Most market stalwarts believed that the benchmark index could consolidate at the current levels in range-bound trading in the upcoming shortened four-session week with investors expected to remain cautious due to the ongoing result season. Engro Foods and Engro Fertiliser are the major companies to announce results in the upcoming week.

Published in Dawn, February 4th, 2018