KARACHI: Bears went on a rampage at the Pakistan stock market in the outgoing week where the KSE-100 index was dented by 463 points, or 0.97 per cent, and closed at 47,137. The index hit high and low of 47,392 points and 46,869 points during the week.

Investors were stunned by the massive selling for all of the week, after the bulls had pushed the index at a dizzy level the week before.

Index continued to climb on the first trading day of the week, crossing the 48,000 psychological barrier, but a worrisome depreciation of the rupee, the quickly changing scenario in Afghanistan, the spike in Covid cases, the pressures of the roll-over week, mixed financial results announced and a general lack of investors’ interest for want of positive triggers set the market on a downward course.

On the news front the major development was the confirmation by the SBP that the country had received $2.75bn from IMF under recently revised SDR allocation by the fund which would raise reserves to a new high. But analysts said some other negatives weakened investors’ sentiments.

Instability in the current economic team resurfaced after another major reshuffle as the chairman of the Federal Board of Revenue (FBR) and Special Assistant to the Prime Minister (SAPM) on Finance and Revenue were changed. The new FBR chairman, the sixth change in three years, baffled the business community. The situation on the external account improved as the trade deficit for July stood at $694m, an 18pc month-on-month decline.

Regarding the upcoming week, major market players, traders and dealers were putting up a bold face. However, the gathering clouds over the horizon on both the geo-political situation and the economic indicators do not support a bullish week ahead. The Afghanistan situation seemed to have provided some positives for Pakistan as the trade ties were starting to build up with investors hoping for a jump in exports of cement, steel and building material in the eventual reconstruction of the war-torn country.

The Afghanistan-Pakistan Transit Trade Agreement is also nearing completion which had been delayed several times before due to disagreements between the parties. However, the late-week militant attack on Kabul airport caused enormous amount of destruction including the killing of 12 American soldiers. The US pledge of revenge dramatically changed the situation as a spill over effect on Pakistan spooked investors at the bourse.

On the economic side, the uncertainty surrounding IMF review (likely to commence from September) remains.

Published in Dawn, August 29th, 2021