Stocks witnessed a topsy-turvy trading week, as Institutional investors hedging their bets ahead of the financial year close and series of other negative indicators kept the benchmark kse-100 index in check.
Equities continued to remain volatile in the outgoing week, with the benchmark index closing at 47,686 points, up 0.2% WoW. Despite positive triggers, including the approval of the Federal Budget and tamer-than-expected inflation data, the market caved into the profit taking sessions ahead of the financial year close with the index hitting highs and lows of 48,080 points and 46,900 points respectively.
Amidst lukewarm investor sentiments over potential MSCI reclassification into Frontier Markets and Financial Action Task Force disappointment, the week opened on a bearish note 600 points on Monday with stocks barely clinging on to 47,000 level.
Additionally, with institutional investors hedging their bets ahead of the financial year close, the market remained under pressure throughout the week. During the week, Insurance Companies led the major selling pressure with over $18 million worth of equities, followed by Mutual Funds with over $10 million worth of equities.
However, positive news flow, including the National Assembly passing the federal budget with a majority vote, below-expected inflation reading for Jun’21 (9.7% vs. street estimates of 10.1%, courtesy easing food inflation), and exports hitting an all-time high of $25.3 billion in FY21 triggered market performance during the end of the week.
Along with this, the news of over $1.5 billion record receipts in Roshan Digital Accounts also supported the momentum, and the index concluded the week with a slight gain of 83 points
During the week, the news of National Accountability Bureau (NAB) allowing the Power Division to process payments to Independent Power Producers (IPPs) under Power Policy 2002 also supported activity in power sector scrips.
Additionally, World Bank’s approval of USD 800 milion loan for power sector reforms in the country positively impacted investor sentiments. On the international front, crude oil prices rose by roughly 1.4% on average to over $75/barrel amidst OPEC’s meeting to decide on output levels. Consequently, higher oil prices kept the local E&P stocks in the limelight during the week.