Political noise to set stock market tone next week

• PSX closes at 41,140 points, losing 1,073 points.
• Momentum became negative after PTI announced long march.
  
• Apprehensive investors remain wary of political, economic risks.

KARACHI: Stocks are mostly seen in 'sleep mode' next week as risk-averse investors will monitor the restive political situation unfolding in the country from the safety of their imaginary sidelines.

The market closed at 41,140 points, losing 1,073 points, down 2.5%, week-on-week. Volumes averaged 214 million shares, losing 6% week-on-week, while traded value settled at $28 million, down 1% over the last week.

Arif Habib Ltd (AHL) in a weekly note said the market was expected to remain range-bound in the upcoming week as the participants would remain cautious due to the political noise in the country.

“However, the Prime Minister’s visit to China may bring positive momentum in the market,” the brokerage said.

According to the AHL report, the market commenced on a positive note in the outgoing week as Pakistan exited the Financial Action Task Force (FATF) grey list after four years. “The momentum later became negative after the announcement of PTI’s long march plan,” said the brokerage.

Topline Securities held political noise responsible for the decline.

The disbursement of a $1.5 billion loan to Pakistan from the Asian Development Bank (ADB) was thought to come as a boost to the sentiment, but investor participation remained at the lower end owing to political uncertainty.

Furthermore, during the week, the rupee remained under pressure against the greenback, closing at Rs222.47, down Rs2.06 or 1% week-on-week.

In addition to this, the State Bank of Pakistan (SBP) reserves went down to $7.4 billion this week, down by $157 million compared to $7.6 billion on September 14, due to external debt repayment.

Further, Pakistan’s 5-year CDS crossed the 50% mark during the week, the highest level since November 2009).

Foreigners net-sold equities worth $0.97 million compared to a net-sell of $3.4 million last week.

Major buying was witnessed in technology ($1.0 million), exploration and production ($0.8 million) and oil marketing companies ($0.6 million).

On the local front, mutual funds shed $3.3 million worth of stocks followed by Individuals that rid themselves of $2.4 million shares.

Major gainers and losers of the week

Sector-wise positive contributions came from fertiliser (31 points), automobile parts (4.6 points), and vanaspati (0.22 points). 

Whereas, sectors that contributed negatively were cement (208 points), technology (162 points), exploration and production (126 points), automobile assemblers (106 points) and, power (85 points).

Scrip-wise positive contributors were Engro Fertiliser (39 points), Faisal Bank Ltd (28 points), Systems Limited (53 points), Pakistan Oilfields (22 points), and MCB Bank (21 points). 

Meanwhile, scrip-wise negative contributions came from TRG Pakistan (159 points), Pakistan Petroleum Limited (99 points), Lucky Cement (96 points), Millat Tractor Limited (70 points), and Pakistan State Oil (67 points).