Daily Times

KARACHI: The Pakistan Stock Exchange (PSX) lost momentum in the past week as the market witnessing correction amidst rising geopolitical tensions between Pakistan and India fell by 1.4 percent.

The benchmark index slid by 581 points as foreign selling led the index declining to 39,782 index levels, down 582 points Week on Week (WoW). Average daily volumes for the outgoing week increased 5 percent WoW to 728 million shares while average daily value rose 18 percent WoW to Rs17 billion/ $158 million during the week under review.

Foreigners were net sellers of $16 million during the week. Chemical and banking sectors witnessed net selling of $7.3 million and $5.8 million respectively, whereas net buying of $1.8 million and $1.5 million was seen in textile and food sectors.

‘The market was under dark clouds in the outgoing week as the wider investor community was spooked amid a heated exchange of statements between Indian and Pakistani leadership’, said an analyst at Habib Metropolitan Financial Services (HMFS).

The chain of events was ignited by the recent attack on an Indian army camp which was blamed on Pakistan and the nuclear armed neighbors adopted an aggressive military posture thereafter. The business community on the whole and savvy investors in particular took this as an opportunity to square risky positions and preferred profit taking, he added.

The local political scene was put off the radar with bigger concerns on the horizon as opposition parties geared efforts to launch their fresh wave of protests against the incumbent government.

The month of September 2016 has already witnessed an outflow of $32.14 million whereby selling pressure was evident in banking and cement sectors while other notable index stalwarts were also not spared.

The level of activity at the bourse peaked to historic highs, but the volumes remained concentrated in low cap third, tier stocks.

‘The market seems to have entered a dead-zone around the 40,000 level whereby lack of potent triggers has kept the benchmark swinging in a narrow band’. Third tier stocks are fast exhausting their energy as their sustainability depends on the fruition of stories surrounding the bullish euphoria in these names.

“We expect market could potentially gain traction as geo political noise is expected to subside in coming weeks” an analyst at Elixir Research Department forecasted.