Investors struggled to find a catalyst to set a direction at Pakistan Stock Exchange (PSX) in the shortened (two-session) outgoing week, as risk-shy investors remained away from the index, owing to the rising Afghan crisis, resurgence of Covid-19 and foreign selling pressure.
The PSX benchmark KSE-100 index exhibited a range bound session as it clocked at 47, 703 level inching down from 47,834 points- previous weeks closing, after trading between the weekly high of 48,004.54 points and a low of 47,691.33 points, respectively.
Investor sentiment remained lukewarm primarily due to a shortened trading week due to Eid holidays. Moreover, the departure of US forces from Afghanistan has placed the region in a tight spot, as Afghan Taliban has been staking claim over 90 pc of the country, risking a fallout in the neighbouring countries-with Pakistan facing a major security crisis on its western border.
Foreign investors have particularly been concerned that the developing situation in Afghanistan could have implications for an otherwise peaceful law and order situation in Pakistan, as they have recorded a net sale of over $21 million.
The market also reacted to the resurgence of Covid -19 and return of government lockdowns despite in light of the national positivity ratio (currently at 4.89pc). Sindh has already announced implementation of fresh lockdown measures, raising investors’ fears of widespread Covid SOPs which could possibly hurt economic activity.
Meanwhile, the Pakistani rupee continued its downward slide, losing another 0.52pc to close at 162.32 against the US dollar in the inter-bank market on Friday, said the State Bank of Pakistan (SBP), which also weighed on investor sentiments.
During the week, the trading activity remained volatile as intraday corrections and discounted share prices attracted selective buying.
In the opening session, most significantly Pakistan’s gas companies including Sui Southern Gas Company Limited and Sui North Gas Pipeline Limited touched the day at their respective upper circuits as reports suggested that the multi-billion dollar North-South Gas Pipeline Project between Pakistan and Russia would benefit these companies.
During the week, Sui North Gas Pipeline Limited, Pakistan Services Limited, Systems Limited and Meezan Bank Limited remained the top performers. However, the cement and technology sector underperformed, while among the scrips, ENGRO, Maple Leaf Cement and TRG Pakistan led the losses.
According to the National Clearing Company of Pakistan Limited (NCCPL), among foreign investors’ net trade foreign corporates sold about $25 million worth of equities, overseas Pakistanis mopped up $4.07 million worth of stocks and foreign Individuals sold $18,000 worth of stocks, taking the total net sell to about $21.09 million.
Among the local investors, individuals, companies, insurance companies and brokers led the buying chart and bought about $9 million and $5 million, $2.6 million and $2.4 million worth of equities.
The market is expected to see strong activity in the following week as the 4QFY21 results season comes in full swing. However, the fourth wave of Covid in July may further lead to investors’ flight.