KARACHI: The euphoria for the impressive rally of the previous week that saw the KSE-100 index registering gains of the amazing figure of 2,585 points (nine percent) marking the best week in 10 years, could not stay in the outgoing week.
The shares fell almost 62 percent of previous earnings with the KSE-100 index falling 1,678 points (5.35 percent) and settling below the 30,000 level at 29,672 points.
By the way, the benchmark index closed in negative for the seventh consecutive month and lost 6.8pc during August, which was also the biggest monthly drop this year.
Pakistan's placement on the "enhanced accelerated watch list" by the Asia Pacific Group on August 23 diminished investor sentiment, and the market closed the first trading session in red.
In addition to that, the possible divestment of the 10pc shares of Pakistan Petroleum Ltd (PPL) and the 7pc shares of the Petroleum Gas Development Company (OGDC), the heavyweights of the index, increased pressure on the index, analysts at AKD Securities said. Geopolitical tensions also affected the market.
The most positive thing for the week was the introduction by the government of a presidential ordinance to waive 50{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of the Government Infrastructure Development Cess on the quotas of CNG, energy, fertilizer and industrial gas consumers, while it allowed them the option to liquidate without cash against pending payments sales tax, subsidy and refund of rights receivable from the government.
The development was mainly positive, especially for the fertilizer sector and dampened the overall market downturn. Some other positive aspects were observed as foreign exchange reserves increased by 4 percent during the month and a considerable share of the 12-month Treasury bill indicated that interest rate market expectations had peaked.
The average daily volumes registered 124 million shares, 29{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} per week, while the average value traded stood at 29 million by 23{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} WoW. The volume leaders were Lotte Chemical, in which 53.63 million shares changed hands, followed by K-Electric with a volume of 34.86 million shares, Maple Leaf Cement Factory 29.68 million shares, Unity Foods 25.22 million shares and OGDC 21.55 million shares. Foreign purchases were seen in commercial banks at $ 2.0 million and in technology and communication at $ 1.0 million. Internally, mutual sales were reported by mutual funds at $ 13.5mn, while people bought shares worth $ 8.6 million and banks $ 2.6 million.
Negative sectoral contributions came from oil and gas exploration companies with 519 points, commercial banks with 400 points, oil and gas marketing companies with 160 points, cement with 139 points and power generation and distribution with 216 points The lags in terms of scrip were OGDC 247 points, PPL 193 points, Habib Bank Ltd 134 points, Bank Al Habib Ltd 79 points and Pakistan State Oil 63 points.
In the future, the market is likely to be influenced by several factors. A meeting of the Financial Action Task Force is scheduled to be held in Bangkok on September 5 to discuss the progress made by Pakistan against terrorist financing. The results of the meeting will establish the direction of the market.
Investor confidence would also be influenced by August inflation figures, as they would determine monetary policy outlook for the past few months, which in turn would affect market behavior. Progress in the government's plan to issue 200 billion sukuk to address the problems of the electricity sector could improve feelings, while large discounts on Pakistani shares to their regional peers provide foreign investors with the opportunity to accumulate in the Current levels
Posted on Dawn, September 1, 2019
Source: https://www.dawn.com/news/1502880/psx-closes-seventh-consecutive-month-in-red
