Daily Times

Increasing Covid-19 instances and rising foreign commodity prices caused a sell-off on the Pakistan Stock Exchange last week, but the rebasing of the economy gave some respite and alleviated fears.

The market was under pressure all the week ended on 21 January. The benchmark KSE-100 index fell 745 points (1.8%) last week, closing at 45,018. There has been an uptick in Covid-19 infections this week, which has the market concerned about possible lockdowns and economic disruptions. Investors were forced to sell their stocks due to fears. Government-induced panic led to a dump-and-run strategy. Worse, the KSE-100 was unable to gain due to a lack of market indications.

In addition, news of mutual fund redemptions fueled a pessimistic mood and encouraged profit-taking across the board.

Ahead of Monday’s announcement on interest rates, market participants remained wary. Market participants were bracing themselves for a shift in monetary policy despite expectations that the Fed would keep things as they were.

The stock market’s decline was aided by rupee devaluation versus the US dollar, which continued throughout the week. The stock market suffered from the currency’s depreciation, despite the fact that it was not at its lowest point ever.

The price of oil has risen steadily since 2014, reaching its highest level since that year. The stock market reacted angrily to the news, fearing that imports would continue to rise and the current account deficit would continue to deteriorate.

The KSE-100 index rebounded in the last session, buoyed by the rebasing of Pakistan’s economy. Economic growth in the country was revised upward to 5.4 percent, prompting fresh buying in the market.

According to research by Arif Habib Limited, investors should exercise caution in the coming week as the monetary policy committee meets and inflationary pressure is expected to intensify.

With the International Monetary Fund talks likely to begin again on January 28, this could have an influence on the market.

There was a 43% week-on-week decline in average daily traded volumes, while the average daily traded value fell 17% to $42 million during this week.

Technology and communication accounted for 241 points, commercial banks (96 points), cement (69 points), refinery (65 points) and fertilizer (65 points) contributed negatively to the overall score (63 points).

On the other hand, oil and gas exploration (36 points), power generation and distribution (seven points) and real estate investment trusts (three points) all contributed positively (6 points).

It was TRG Pakistan (-239 points), Cnergyico PK (-31 points), MCB Bank (-23%), Dawood Hercules (-22%), and PSO (-22%), among other stocks, that were the biggest drags on the market (21 points).

Meanwhile, KAPCO (30 points), Mari Petroleum (24 points), and Bank AL Habib made strong contributions to the stock market (23 points).

There was net selling of $2.09 million worth of foreign stocks, compared to net buying of $0.53 million in the previous week.

Oil marketing companies sold for $1.4 million, while technology and communication companies sold for $1 million. There was a total of $12.4 million in local purchases, followed by $5.7 million in bank purchases.