KARACHI: Bears re-grouped in the outgoing week to launch an assault on the equity market, which sent the KSE-100 index scurrying down by 592 points (1.43 per cent) to close at 40,844 points.

A generally negative MSCI’s Emerging Market Semi-Annual Review and sliding oil prices were the major sentiment dampeners during the week. Investors did not take much notice of a thaw on the political scene.

The semi-annual review of the leading global index provider reduced Pakistan weight in the Emerging Market to 0.08pc from 0.14pc. A senior broker conceded that it was not much of a surprise given the 19.3pc erosion in the KSE-100 index since its official transition to emerging market from frontier market effective June 1. The MSCI also reclassified Engro Corporation from EM large cap to small cap stocks, given the dent on market capitalisation and free-float due the melting market.

In addition, the MSCI removed Ferozsons Laboratories, Pak Suzuki Motor Co and the Shell Pakistan from the MSCI small cap stocks. Resultantly, PSMC declined by Rs25.09, Engro Corp Rs18.38, Shell Pakistan Rs16.82 and Ferozsons Rs6.61 during the week.

On the commodity front, escalation in oil prices came to a halt amid rising US stockpiles and Russia admitting indecisiveness on further production cuts.

The E&P companies tracked receding oil prices while the abrupt shutdown of furnace oil- based plants disrupted the entire energy supply chain.

Foreign investors were net buyers of $1.4m worth stocks during the week against net outflow of $1.8m the week before. On the local front the mutual funds remained the major sellers of $15.98m followed by the banks that offloaded shares valued at $3.97m. The sell-off was absorbed by insurance companies and individuals who made net purchases of $8.09m and $2.32m.

The average traded volume for the week declined 7pc to 106.05m shares where the trading was dominated by second- and third-tier stocks including ANL (59m shares), TRG (49m), SSGC (20m), SNGP (20m) and KEL (19m). The average daily traded value stood down by 15pc to $1m.

According to AKD Securities, leading gainers during the week were ASTL (3.05pc), NCL (2.23pc), Indus Motor (1.57pc), FFBL (1.4pc) and MLCF (0.96pc). The laggards included: Engro Corp down 6.38pc, KE 6.12pc, PSO 5.53pc, CHCC 4.88pc and EFoods 4.63pc.

According to dealers at Topline Securities, gainers including PAKT, TRG, PIBTL, Colgate Palmolive and HMB added 103 points to the index during the week. On the other hand, Engro Corp, DAWH, MCB, PSO and OGDC wiped off 357 points.

Analysts at Arif Habib Securities observed that major selling was witnessed in commercial banks ($3.48m), fertilisers ($1.84m), telecom ($1.64m) and cements ($1.53m).

Major news flow during the week were: Foreign Direct Investment (FDI) for 4MFY18 remained encouraging at $940m (up by 74pc), trade gap widened to $3.04bn in October, auto sales grew 32pc and Pakistan is set to receive $4.7bn under ADB’s new business plan.

OUTLOOK: The KSE-100 is currently trading at price-to-earnings ratio of 8 times the 2018 earnings while offering dividend yield of 6.3PC. AKD Securities stated that the Opec’s 173rd ordinary meeting is scheduled for Nov 30 where possibility of further extension in agreed production cuts cannot be ruled out while US exports continue to rise. In this backdrop, a broader index is largely expected to mimic international oil prices. “Moreover, clarity over furnace oil upliftment from refineries and resumption of power plants will dictate the course of action of the energy chain in the upcoming week”.

Published in Dawn, November 19th, 2017