KARACHI: Pakistan stocks rose by 352 points or 0.8 percent week-on-week (WoW), starting on a positive note but later shedding some of its gains likely due to critical assessment by International Monetary Fund (IMF) over external/fiscal account imbalances in its post-program evaluation report. Volatility can be further attributed to investors’ confusion over super charged political landscape flowing Senate Elections where Pakistan Muslim League (PML-N) managed to secure majority but opposition backed Sadiq Sanjrani and Saleem Mandviwalla managed to secure the Chairman and Deputy Chairman positions respectively. Trading activity increased mainly in sideboard items as average traded volumes grew 15 percent WoW to 175 million share but average traded value declined by 9 percent WoW to $ 55 million. “With political noise settling down with election of Senate’s chairman, market will likely keep an eye on economic developments. With regards to the latter, we expect that the concerns shown by IMF will likely keep the investors cautious. Besides, we foresee that upcoming monetary policy later this month would likely be influenced by IMF’s recommendations”, said an analyst at Elixir Securities. The analyst expects headline inflation to further drop owing to decline in food item prices and high base effect of last year, core NFNE (Non Food Non Energy) inflation is expected to inch up. Exploration & Production (E& P) sector was the main driver of the index, rising 2.8 percent WoW led by increase in oil prices. FTSE’s Semi-annual Rebalancing came into effect as of Friday’s close, through which the Index Provider removed Thal Limited (THALL) and Pakistan Telecommunication Limited (PTC) from its Global Equity Series (Small Cap) Index. While trading activity picked up sharply, particularly in THALL, the stock prices for THALL/PTC actually posted gains of 3%/1% during the week. IMF’s post program evaluation report showed concerns over widening growing external/fiscal imbalances, decline in FX reserves and debt sustainability risk. Besides its expectation of growing gross external financing over the years, it also slashed its GDP growth forecast for FY19F/long term from 6.0%/5.9% to 4.7%/5.0%. Moreover, IMF recommended continuation of exchange rate flexibility and further monetary policy tightening to address the issues. Companies were the major net buyers worth $32.1 million mainly due to NDM deal of HUBC’s 204 million shares. Individuals/Foreigners/NBFC/Other Organizations were the major net sellers with net selling of $ 16.9 million/$ 10.5 million/$ 9.0 million/$ 4.3 million, where the Individuals, NBFC and Other Organizations were inflated due to above mentioned HUBC’s transaction. Foreign investors remained on the sidelines with net selling of $10.4 million during the week which was mostly absorbed by local mutual funds with net buying of $6.3 million amidst improving liquidity. Most of the selling by foreign investors was seen in the banking, oil marketing and technology and communications sector. Published in Daily Times, March 18th 2018.