KARACHI: The stock market maintained its despondency for the fourth consecutive week with the KSE-100 index contributing losses of 437 points (1.4 per cent) to close at 52-week low of 31,666.

The investors’ attention shifted to surge in headline inflation for July hitting six-year high of 10.34pc; delay in the launch of state enterprise fund which was expected to support the market; and expectations of poor financial results particularly from cyclicals for the quarter ended June 30.

The traders’ announcement of protest strike and generally poor economic indicators kept the market on tenterhooks.

The problems were exacerbated by the flare up in political activities as the government-backed Senate Chairman Sadiq Sanjrani surprisingly survived no-confidence vote on Thursday, despite opposition’s majority in the upper house.

Investors ignored the US administration resuming $125 million military sales for Pakistan; the government reported to be planning to issue another Rs200 billion energy sukuk after Eid (third week of August) in a bid to reduce outstanding energy sector’s circular debt and the government raising $500m through an Islamic syndicated loan by a consortium of 12 banks.

The Federal Board of Revenue reported collection of Rs227bn (95pc of the set target) for July which also was a positive development that failed to impress investors.

According to the data released by the National Clearing Company of Pakistan Limited, foreign investors remained net buyers picking up stocks worth $3.4m during the week. Major foreign portfolio inflow was noted in Cement of $3.1m and All Other Sectors combined $1.2m.

On the local front, mutual funds continued to dump stocks worth $4.8m, followed by selling by companies in the sum of $1.7m. Average daily volumes for the outgoing week stood down by 25% to 57m shares while the traded value declined 21pc to $13m.

During the week, commercial banks dragged the index down by 239 points, followed by exploration and production and the tobacco companies cumulatively eroding 109 points from the index. Oil and gas marketing companies shed 32 points.

Scrip-wise, major losers were Pakistan Petroleum, lower by 69 points, MCB 62 points, Pakistan Tobacco 57 points, United Bank 56 points, and Bank Al Habib 44 points. Top gainers were Pakistan Oilfields, higher by 37 points, Engro Corporation 17 points and Packages Ltd 15 points.

Going forward, most gurus expect the market to remain range-bound, mainly in concert with the declaration of quarterly financial results where cyclical sectors are expected to make a poor showing. Other principal negatives include the economic concerns on account of high current account deficit and slowdown in large scale manufacturing.

The uncertainty on Pakistan’s success in avoiding the placement on the Financial Action Task Force black list and the unsavoury developments on the political front are other concerns that could keep investors on the sidelines.

On the positive side, earnings surprises and multi-year low valuations at 5.5 times the forward earnings could trigger a rally.

Published in Dawn, August 4th, 2019