KARACHI: Growing doubts about the formation of a new coalition government amid raging protests against alleged manipulation of election results across the country kept the market sentiment depressed in the outgoing week.

The equities received a massive battering on the first day of the trading week as nervous investors resorted to panic-selling amid an inordinate delay in announcing a clear-cut power-sharing formula by the PML-N and the PPP wiping out 1, 878 points in a single session.

In the subsequent two sessions, the market showed a mild recovery after some progress had been reported on the PML-N-PPP coalition setup. However, the announcement by the Pakistan Tehreek-i-Insaf that it would form governments in the Centre, Punjab and Khyber Pakhtunkhwa with nominations for prime minister and chief ministers jolted the market sentiments and as a result the index lost over 2,280 points in the last two sessions taking the index below the 60,000 level.

Hence, the KSE 100-share index closed at 59,872.96 points plunging by a staggering 3,071.04 points or 4.9pc week-on-week.

Arif Habib Ltd said besides political uncertainty, the rejection of the proposed plans related to curtailment of the energy circular debt and industrial power tariff by the International Monetary Fund also dented investor confidence.

Furthermore, the caretaker federal cabinet’s approval of a massive hike in gas prices drew strong reactions from across all segments, particularly industrialists. Also, there was a rise in the prices of petrol and diesel.

However, the large-scale manufacturing output rose by 3.4pc year-on-year in December. Remittances jumped 26pc to $2.4 billion in January.

Moreover, the State Bank of Pakistan’s reserves inched up by $12 million, reaching $8.1 billion. During the week the rupee closed at Rs279.36 against the greenback, weakening by Rs0.08 or 0.03pc week-on-week.

Sector-wise negative contributions came from oil & gas exploration companies (1,176 points), cement (288 points), power generation & distribution (287 points), oil & gas marketing companies (216 points) and commercial banks (206 points). Meanwhile, the sector which mainly contributed positively was textile spinning (3 points).

Scrip-wise negative contributors were Oil and Gas Development Company Ltd (730 points), Pakistan Petroleum Ltd (377 points), Hub Power Company (221 points), PSO (149 points) and Lucky Cement (117 points). Meanwhile, scrip-wise positive contributions came from Engro Fertilisers Ltd (93 points), MCB Bank (33 points), Fatima Fertiliser Company Ltd (19 points), National Foods Ltd (14 points), and AGP Ltd (9.24 points).

Foreign buying was witnessed during the outgoing week, clocking in at $5.2m compared to a net buy of $5.7m last week. Major buying was witnessed in exploration & production ($2.2m) and all other sectors ($1.2m). On the local front, selling was reported by broker proprietary trading ($5.9m) followed by banks/DFI ($2.1m).

Average volume rose 14.5pc to 350m shares while the average value traded value dipped 3.6pc to $48m week-on-week.

According to AKD Securities Ltd, the market is expected to remain volatile in the near term but will cool off as political dust settles, especially with the announcement of the upcoming cabinet. However, in the medium term, market performance will likely hinge on the signals from the new government’s dealings with IMF for the second review under the $3bn Stand-By Arrangement review and the next EFF programme.

Published in Dawn, February 18th, 2024