KARACHI: The four-week rally at the stock market was snapped in the outgoing shortened four-session week as the KSE-100 index lost 324 points, or 0.74 per cent, to close at 43,417.

The index tumbled by 834 points in the first two days of the week. The trading was led by the news flow on the Covid-19.

The market lost 406 points on the first day of the week as a new and more contagious strain of coronavirus was detected in the UK, leading to lockdowns and shutdowns. As the countries fearful of import of virus from the European countries put a halt to flight to and from the UK, the fear led to slump in global equities and commodities.

The crude oil declined by 2.8pc, while the Dow Jones index fell by 0.7pc.

The market also remained under pressure on concerns over the first few days over the rollover of high open interest during the week. However, encouraging external account positions and the news of the potential resumption of the International Monetary Fund (IMF) programme provided some optimism.

The market put up a positive performance in the next two days —Wednesday and Thursday and recovered 510 points due mainly to the smooth settlement of the roll-over positions.

Other than that, the country achieved a current account surplus for the fifth straight month, the expectation of the government extending the amnesty period for the construction sector, and expected restoration of the IMF programme were positive factors. Foreign exchange reserves remained stable at $20.3 billion while workers’ remittances stood at $2.34bn.

Foreigners offloaded stocks of the net worth of $20.4 million; the foreign sale the preceding week amounted to $9.36m. Outflow was noted from fertiliser $8.23m and power $5.46m.

Among local participants, companies were major buyers of stocks of $25.1m, followed by broker proprietary trading buying of $1.17m. Average daily traded volumes declined 34pc over the previous week to 203m shares.

Average traded value for the outgoing week dropped by 21pc to $75m. During the week, the government reportedly decided to hike power tariffs by 25-30pc and do away with up to Rs200bn in corporate tax exemptions, a move which is expected to catalyse resumption of the stalled IMF’s program.

Sector-wise contribution to the downside in the week was led by oil and gas exploration companies 229 points, commercial banks 155 points, fertilisers 77 points, pharmaceuticals 44 points, and food & personal care products 24 points.

Top performing sectors were automobiles, cement and chemicals. Scrip-wise major losers were Pakistan Petroleum Ltd 76 points, Oil and Gas Development Company 68 points, Pakistan Oilfields Ltd 52 points, Meezan Bank Ltd 51 points, and Engro Corporation 56 points. Whereas, scrip-wise major gainers were TRG Pakistan 46 points, Cherat Cement Company 40 points, Lucky Cement 34 points, Systems Ltd 29 points and Ghani Glass Ltd 29 points.

Going forward, market gurus said that the slowdown in Covid-19 infection ratio, news of global rollout of a vaccine and improvement in foreign exchange surplus, stable dollar-rupee parity and rising construction activity that would increase demand of cement and steel, could boost sentiments. The stimulus package by the US congress and resumption of Pakistan’s IMF program could also help lift investors’ sentiments. The market may regain its bullish stance on fresh allocation of funds by the foreign investors and local institutions post-Christmas and New Year.

Published in Dawn, December 27th, 2020