Bearish trend was witnessed on Pakistan Stock Exchange (PSX) during the outgoing week mainly due to foreign selling and the benchmark KSE-100 index declined by 581.73 points to close at 39,781.95 points.
Trading activities slightly improved as the average daily volume increased by 5 percent on week-on-week basis to 728 million shares. Average daily traded value increased by 17.9 percent on week-on-week basis to Rs 17 billion ($158 million).
Foreign investors remained net sellers of shares and withdrew $15.3 million from the Pakistan's share market. Chemical and banking sectors witnessed net selling of $7.3 million and $5.8 million respectively, whereas net buying of $1.8 million and $1.5 million was seen in Textile and Food sectors.
Tobacco sector was the top gainer over the week, up 5.3 percent, followed by Cement and Automobile Assembler, which increased 1.4 percent and 1 percent respectively. Fertilizer and commercial banks sectors were among the top losers as they fell 4.6 percent and 1.7 percent respectively.
An analyst at Topline Securities said that activity at the local bourse was driven essentially by political tension between India and Pakistan and rumours of investors facing margin calls. Although political tensions eased towards the end of the week, foreign selling led the index declining to 39,782 index levels, down 1.4 percent on week-on-week basis.
Faizan Ahmed, at JS Global Capital, said after closing at all-time high levels during the last week, the market witnessed correction during the outgoing week amidst rising geopolitical tensions between Pakistan and India, which was further exacerbated by margin calls on leveraged positions. Most retail investors booked profits post strong rally, especially in third tier stocks. Also, foreigners remained net sellers of around $16 million due to redemptions in frontier market funds and escalating tensions with India. Of the key sectors, overall buzz remained concentrated into third tier scrips with average volumes and value increasing by 5.3 percent and 25 percent, respectively. Interestingly, local mutual funds (Net Buy of $1.1 million) and banks (Net Buy of $7.8 million) continued to absorb most of this selling pressure, curtailing market decline.
An analyst at KASB Securities said that the volatility has set in this week following index ascend to new all-time high and volumes setting multi-year record last week. Index shed 1.4 percent as the political tensions between India and Pakistan escalated coupled with profit taking spree. The week started on a positive note as the index touched a record high of 40,507 with 876m volumes (highest in 11 years) mainly led by heavy activity in side boards.
However, a dip was witnessed in the mid-week on account of political uncertainty given rising India-Pakistan tension on Kashmir issue, which nevertheless subdued later in the week after assurances from military leadership, thus restoring investors' confidence to mark some recovery in index.
During the week, automobile sector remained in the limelight on the back of encouraging local sales data. HCAR and MTL were among the top performers for the sector. Fertilizer sector underperformed as the government failed to decide mechanism for disbursement of subsidy on imported DAP while restricted demand continued to push urea prices down where a dip of Rs 20-80/bag was witnessed in local urea prices in order to clear inventory. Oil & Gas remained under pressure initially even with an increase in oil prices but posted some gains towards the end of the week playing an important part in Thursday's recovery. Strong volumes were seen in Worldcall Telecom Ltd (WTL) as the company's acquisition news gained weight while the KEL also displayed high volumes because of similar reasons. Heavy profit taking was also seen in some sideboard stocks like DFML shedding gains made in past trading sessions.