A turbulent week at the Pakistan Stock Exchange (PSX) finally came to an end as lack of triggers and limited investor interest took toll on the benchmark KSE-100 index, which fell 123 points or 0.3% to close the week at 47,563.45 during the week ended July 9, 2021.

Trading kicked off Monday on a bearish note. Political tensions following a rally of the Pakistan Democratic Movement (PDM) in Swat after several months coupled with soaring inflation and failing efforts of the government to control price hike added to concerns of investors.

Bears maintained a firm grip in the next two sessions as well in line with the performance of regional equity markets. On Tuesday, the National Command and Operation Centre (NCOC) discussed the re-imposition of stringent standard operating procedures in view of a consistent uptrend in Covid-19 cases over the past one week, which weighed on investors’ mind. Moreover, uncertainty in global equity markets and rising trend in international oil prices allowed bears to maintain control. Contrary to the lacklustre activity observed during the first three trading session, Thursday witnessed a surprise rally of over 800 points.

A positive diplomatic development where the US State Department appreciated Islamabad for its support in matters pertaining to Afghanistan also helped fuel optimism in the market. Moreover, hike in steel, fertiliser and cement prices kept the sectors under limelight, which also acted as a catalyst and helped the index maintain its uptrend during the session.

Unfortunately, the buoyancy did not last and the market dived back to the red zone on the last day of the trading week in the wake of upcoming corporate earnings season.

“Going forward, we expect the market to pick pace next week. The result season is about to commence and we think that cyclical sectors can once again attract limelight on back of robust economic activity,” stated AHL Research in a report.

“Moreover, oil prices have continued to remain downwards sticky with no outcome on the oil output increase, which could spur buying in exploration and production scrips,” the report added. However, it said that fears over the fourth wave of Covid-19 could keep the sentiment cautious.

Average daily traded volume dropped 22% week-on-week to 486 million shares while average daily traded value declined 1% week-on-week to settle at $107 million. In terms of sectors, negative contributions came from oil and gas exploration companies (68 points), tobacco (57 points), refinery (49 points), textile composite (41 points) and food and personal care (36 points). On the other hand, sectors that contributed positively included commercial banks (127 points), fertiliser (50 points), technology and communication (50 points), investment banks/investment companies/securities companies (10 points) and chemical (6 points).

Scrip-wise, negative contributors were Pakistan Tobacco Company (58 points), Unity Foods (39 points), National Refinery (37 points), Pakistan Petroleum (28 points) and Azgard Nine (21 points). On the flip side, major gainers were HBL (88 points), TRG Pakistan (43 points), Meezan Bank (35 points), Engro Fertiliser (31 points), and AGP (26 points).

Foreign selling continued this week clocking-in at $5.2 million compared to a net sell of $8.4 million last week. Major selling was witnessed in all other sectors ($5.4 million) and food sector ($1.1 million). On the local front, buying was reported by companies ($4.1 million) followed by mutual funds ($3.9 million).

Among other major news of the week; World Bank stopped disbursement of a $400 million loan, Pakistan’s power production hit record high at 24,284MW, Pakistan raised $1 billion from Eurobonds, OPEC+ abandoned policy meeting after Saudi-UAE clash, the government raised Rs146b in the latest PIB auction and foreign exchange reserves with the SBP jumped by $1.1b to a multi-year high of $17.2b.

Published in The Express Tribune, July 11th, 2021.

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