Equities took a heavy hit on the first day of the trading week as jittery investors engaged in panic-selling amid prolonged delays in announcing a clear power-sharing arrangement by the PML-N and the PPP, resulting in a loss of 1,878 points in a single session.
In the following two sessions, the market witnessed a slight recovery after reports of progress in the PML-N-PPP coalition formation. However, the announcement by the Pakistan Tehreek-i-Insaf that it would assume governance in the Centre, Punjab, and Khyber Pakhtunkhwa, along with nominations for prime minister and chief ministers, rattled market sentiments. Consequently, the index dropped over 2,280 points in the last two sessions, pushing it below the 60,000 level.
Consequently, the KSE 100-share index concluded at 59,872.96 points, plummeting by a significant 3,071.04 points or 4.9 percent week-on-week.
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Arif Habib Ltd mentioned that apart from political uncertainty, investor confidence was shaken by the rejection of proposed plans regarding the reduction of energy circular debt and industrial power tariffs by the International Monetary Fund. Additionally, the caretaker federal cabinet’s approval of a substantial hike in gas prices sparked strong reactions across all sectors, particularly among industrialists. Moreover, there was an increase in petrol and diesel prices.
Despite this, the large-scale manufacturing output saw a 3.4 percent year-on-year increase in December, and remittances surged by 26 percent to $2.4 billion in January. Furthermore, the State Bank of Pakistan’s reserves saw a slight uptick of $12 million, reaching $8.1 billion. The week concluded with the rupee closing at Rs279.36 against the greenback, weakening by Rs0.08 or 0.03 percent week-on-week.
Sector-wise negative contributions came primarily from oil & gas exploration companies (1,176 points), cement (288 points), power generation & distribution (287 points), oil & gas marketing companies (216 points), and commercial banks (206 points). On the other hand, the textile spinning sector made a positive contribution (3 points).
Among individual stocks, negative contributors included Oil and Gas Development Company Ltd (730 points), Pakistan Petroleum Ltd (377 points), Hub Power Company (221 points), PSO (149 points), and Lucky Cement (117 points). Conversely, positive contributions came from Engro Fertilisers Ltd (93 points), MCB Bank (33 points), Fatima Fertiliser Company Ltd (19 points), National Foods Ltd (14 points), and AGP Ltd (9.24 points).
Foreign buying during the week amounted to $5.2 million compared to a net buy of $5.7 million the previous week. Significant buying was observed in exploration & production ($2.2 million) and all other sectors ($1.2 million). Meanwhile, local selling was reported by broker proprietary trading ($5.9 million) followed by banks/DFI ($2.1 million).
Average volume increased by 14.5 percent to 350 million shares, while the average traded value dipped by 3.6 percent to $48 million week-on-week.
According to AKD Securities Ltd, the market is expected to remain volatile in the short term but may stabilize as political uncertainties subside, particularly with the announcement of the upcoming cabinet. However, in the medium term, market performance will likely depend on signals from the new government’s negotiations with the IMF for the second review under the $3 billion Stand-By Arrangement and the next EFF program.