Stocks retreat after three-week rally KARACHI: After a strong three-week long rally, the stock market took a breather in the outgoing week with the KSE-100 index retreating by 173 points (0.42 per cent) to close at 41,291.
The KSE-100 index succumbed to selling pressure during the week amidst strong volatility, attributed to continued rise in political tensions within and outside the country and foreign outflows from equities.
Some senior brokers blamed retreating global crude prices, which triggered selling in exploration and production (E&P) scrips and increase in international coal prices which affected investor appetite for cement stocks. Market participants also thought that the onset of rollover week for futures contract from next week also forced weak holders to reduce exposures.
Average daily volume for the outgoing week rose 17pc to 471 million shares while average daily value rose by 6pc week-on-week to Rs15 billion over the preceding week.
Institutional buying was witnessed on suggestions that Rs5.75bn was allocated by Sindh Pension Fund to some asset management companies for investment in the equity market. Volume leaders during the week were again retail favourites: BOP with trading in 289.5m shares followed by TRG 119.2m, PACE 82.9m and JPGL 82.7m shares.
Foreign investors were net sellers of $8.5m worth stocks during the week. According to dealers at Topline Securities, cement and chemical sectors saw net outflow of $5.9m and $2.5m, respectively, whereas banking sector saw net buying of $0.9m.
Analysts at Intermarket Securities stated that the major downside contribution during the week came from LUCK down 4.78pc followed by HUBC 3.11pc, MCB 2.46pc, DGKC 5pc and DAWH 3.91pc.
According to AKD Securities, leading gainers during the outgoing week included: EPCL rose 9.3pc week-on-week followed by APL 8.83pc, SNGP 8.77pc, HASCOL 4.46pc and NML 3.45pc.
Analyst Faizan Ahmed at JS Global observed that in the mainstream sectors, most of the interest remained tilted towards oil marketing companies, which gained 2.6pc on week-on-week on account of better than expected 1QFY17 result announcements. Textiles rose 3.4pc on expectations of favourable exports package and E&P stocks were up 1.1pc on rebounding international oil prices. On the flip side, sectors such as cements fell 4.4pc on mounting international coal prices and possible cut in PSPD spending. Fertilisers were down 1.3pc on profit-taking. Another market expert asked not to miss out food and personal care sector, which he calculated was one of the top gainer of 2.2pc over the week.
News flow during the week included: current account deficit up 136pc year-on-year to $1.37bn in 1QFY17, receipt of $1bn sukuk issue, rejection of all bids in PIBs auction, possible decrease in power project capacity notified by Hubco, extension of tax holiday for shipping industry announced by the government and Rs200bn package expected for export sector.
Outlook: Investors would closely track the developments from Nov 1 when the Supreme Court would begin hearing on Panama Papers just a day ahead of the PTI sit-in. Market could remain volatile during the week though it would draw direction from September 2016 result season, which is expected to remain in full bloom with announcements by heavyweights such as PSO, HUBC, FFC, LUCK, OGDC, ENGRO and MCB, due next week.
“We expect heightened investor interest in small cap stocks to continue in near term. The direction of FIPI flows will continue to remain critical to market direction,” research analysts at BMA Capital said.