Stocks dip by 557pts during past week on constant volatility

The market remained under the grip of heightened volatility as rising political tensions and last day rumours of investigations against brokers kept investors cautious.

As a result, Karachi Stock Exchange (KSE)-100 index closed at 33,891.08 points, shedding 556.39 points or 1.61 % as compared to previous week’s closing at 34,447.47 points.

Elixir Securities’ analyst said the benchmark index contracted by 1.6% during the week, with decline witnessed primarily on the last trading day as concerns over action against a few brokers & client segregation notice gave way to panic selling.

Construction and material and banking sector led the decline contributing -245 points to the in the index during the week. With concerns over sustainability of the pricing arrangement in the backdrop of continual expansion announcements weighed on cement sector while low inflation reading reinforced expectation of prolonged lean interest rate cycle dragging the banking space.

Regional markets direction along with clarity on rumours of investigation against brokers is likely to guide the market performance”, he added.

Trading volume declined by 23% Week on Week (WoW) averaging at 145 million relative to 187 million in the previous week. Foreigners remained net buyers during the week mopping up shares worth $13 million during the week after offloading shares worth $ 42 million in the previous two weeks.

JS Research’s analyst Raheel Ashraf said the local bourse remained volatile during the outgoing week as rising political tensions and global currency meltdown continue to affect investors’ sentiments.

During the week the government finally announced the much-awaited gas tariff hike, after which fertilizer manufacturers receiving concessionary gas garnered investors’ interest as FFC raised urea prices by Rs159/bag.

Gas utilities too outperformed the index as their financials are expected to receive a boost from the latest gas price hike, while recovery in international oil prices resulted in out performance of oil stocks, he added.

Shajar Capital Securities’ research analyst Yawar Uz Zaman said the KSE-100 showed persistently negative performance, as the continued pressure on the global

equity markets have shaken the positive sentiments at the local bourse. Despite lower inflation figure, investor looked to book profit where Cement and Fertilizer sector led the index losses.

Where decrease in petroleum products prices is encouraging for energy intensive industries, the government’s decision to enhance gas tariff on all industries nullified the impact whereas Chemical and Textile sectors’ turned negative after the announcement. However, recovery has been observed as the former increased Urea prices to pass-on the additional impact to the end consumer.

“As key corporate giants have already announce financial results, we foresee market to remain sensitive towards news flows; where any development on local and international front could drive market sentiments”, said Zaman.

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