KARACHI: The stock market remained under pressure in the outgoing week as the KSE-100 index lost 1,323 points (2.9 per cent) to settle at 45,222 points amid persistent political uncertainty and concerns on foreign outflows.

Monday marked the highest-ever single-day decline in the index by 1,900 points. Another distraction came mid-week in the form of depreciation of the rupee by a startling 3.1pc, which was a nine-year record single-day decline, to Rs108.30.

Analysts at Arif Habib Ltd (AHL) said “Although long awaited, given the decline in foreign exchange reserves and the exacerbating position of the current account deficit, revised upwards to $10.6 billion in the first 11 month of 2016-17, a sudden plunge in rupee remained unexplained.

Reversal in the parity followed the next day with interbank closing of the week at Rs106.10, indicating recovery of 1.9pc, from Rs108.30.”

Meanwhile, AKD Securities commented that the record rupee depreciation built some impetus, but summoning of the Sharif family members and the associate by the JIT added to the prevailing risk-off sentiment.

“As the appreciation in the dollar provided a short lived spike to index, major buying was witnessed in export-oriented sectors (mainly textile),” said dealers at Spectrum Securities.

According to Topline Securities, the lack of investor interest was also evident from the lacklustre volume and value, which fell by 40pc and 39pc, respectively to 166 million shares and Rs9.2 billion ($88m) over the previous week. The volume leaders during the week were TRG, EPCL, BOP, KEL and ASL.

Foreign investors offloaded $5.84m worth of securities during the week; against net buying of $9.2m the earlier week ended June 22, which was largely absorbed by domestic individuals and insurance companies with net buy of $13.69m and $13.68m, respectively.

During the outgoing week, foreigners bought stocks worth $5m in cement sector whereas selling was seen in oil and gas exploration ($6.2m) and banks ($3.3m).

According to AHL, the downside in the index was led by commercial banks, down 546 points given the lower than expected inflationary readings, signalling a delay in interest rate hike; decrease of 299 points in cement sector and 160 points off the automobile assemblers.

At the other end, oil and gas exploration companies provided respite to the market with increase of 172 points. PPL was the top index gainer with contribution of 144 points.

Other notable outperforms were PIBTL 24 points; Hubco 24 points; OGDC 23 points and MLCF 14 points.

“Other than that, PIBTL, HUBC, OGDC and MLCF cumulatively added 85 points. While LUCK, HCAR, PAEL pulled the index by 361 points,” stated dealers at Elixir Securities. Performance leaders during the week according to AKD Securities were PPL up 10.08pc, SSGC 5.66pc, MLCF 2.54pc, HMB 1.36pc and HUBC 1.34pc, while laggards included HCAR down 14.91pc, LUCK 9.92pc, FFBL 9.34pc, UBL 8.64pc and PSMC 7.61pc.

OUTLOOK: According to AHL Research, focus is now set on the submission of findings by JIT to the Supreme Court on Monday, which should facilitate the direction of the ongoing political racket.

Any opportunity of dissipating political clouds could provide a new support to the market. The KSE-100 is currently trading at a cheaper price to earnings ratio of 9.2x (2017) compared to Asia Pacific regional average of 13.2x while offering twice as better dividend yield of 5.3pc versus 2.6pc offered by the region.

Analysts at AKD Securities said that the political uncertainty is expected to remain top of the investors’ mind in coming week as July 10 is the stated deadline to submit JIT report to the Supreme Court. Barring any unforeseen outcome, market may consolidate at these levels with investors expected to favour dividend paying stocks, group holding companies and diversified conglomerates.

Elixir Securities stated that they believed that the conclusion of JIT investigation and continued political uncertainties would keep the market under pressure.

However, further depreciation of the rupee shall guide the market in specific direction where power, textile and export oriented stocks would remain in the limelight, while import-oriented stocks could witness significant attrition in the prices.

Published in Dawn, July 9th, 2017