The Karachi stock market continued to witness a bearish trading week as investors adopted a cautious approach despite a positive budget for the capital markets.
The reasons for the negative trend are prevailing concerns among investors related to continued diplomatic tension between the US and Pakistan, rupee depreciation, weakness in oil prices and monetary policy expectations, which weighed heavily on their minds.
The Karachi Stock Exchange (KSE) 100-share index shed 318.27 points or 2.29 percent to close at 13, 558.70 points as against previous week’s close of 13,876.97 points.
“Investors adopted a cautious approach throughout the week despite a positive budget for the capital markets,” said JS Sec analyst Furqan Ayub. “Foreigners too were downbeat as they sold shares worth $16.8 million.”
The US did agree to reimburse $1.18 billion to Pakistan on account of Coalition Support Fund but the issue of reopening of NATO supply routes remains unresolved, he said and added that the stalemate was further fueled on the difference of opinions on drone strikes and the Salala tragedy. A senior US official is expected in the country next week to break the deadlock between the two countries on reopening of NATO supply routes.
As per market expectations, the State Bank of Pakistan (SBP) adopted a wait-and-see approach by keeping interest rate unchanged at 12 percent. In its monetary policy statement, the SBP highlighted managing external and fiscal pressures as key concerns in the immediate term. Moreover, the SBP also emphasised on the importance of reviving private investment in the economy and the need of fundamental reforms to turnaround the economy.
News of restoration of gas supply to Engro’s Enven plant kept the stock in the limelight throughout the week as it outperformed the market by 4.0 percent. On the other hand, Pakistan Oilfields Ltd underperformed the market by 1.6 percent on the recent slide in oil prices.
The turnover fell 16.19 percent and traded 124.43 million shares as compared to previous week’s 107.09 million shares
“Tumbling global stocks outweighed the stock market related positive budgetary measures,” said Topline Sec analyst Samar Iqbal. “In the absence of any trigger investors remained on the sidelines as volumes fell by 40 percent to Rs 3.2 billion.”
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