The stock market witnessed a volatile trading week as investors took cues from the ongoing earnings season. The KSE-100 settled with a gain of 419 points, or 0.9% in the outgoing week at 46,227.65.

“It was a bit of a rollercoaster ride at the local bourse this week, as the KSE-100 index started off positively in the initial trading sessions, before witnessing a sharp correction and ending the week with a flattish Friday,” said JS Global analyst Ahmed Lakhani.

On the political front, matters remained heated due to the preparations for the upcoming Senate elections. The government also found itself in a difficult position after constant criticism over an increase in power tariff, which came on back of an agreement with the International Monetary Fund (IMF).

After a bout of selling pressure in the previous week, stocks snapped a six-day losing streak and bounced back into the green zone on Monday on the back of positive macros. The participants welcomed the upbeat economic data, which included a handsome increase of 11.4% in the large-scale manufacturing index (LSMI) in the month of December 2020 and encouraging remittances data announced by the State Bank of Pakistan (SBP) as inflows exceeded $2 billion for the eight successive month in January 2021.

Rising oil prices in the international market, strengthening currency and impressive financial results in the corporate sector kept investors sentiment optimistic on Tuesday as well. Cumulatively, bulls added a total of 1,000 points during these two days.

Unfortunately, by mid-week sentiments turned sour as investors started offloading stocks, which dragged the market down. Uncertainty over revival of the IMF programme and unimpressive financial result posted by HBL triggered technical selling, which pushed the index in the red.

Also read: KSE-100 reverses bearish trend

The market remained under pressure on Thursday amid the government’s decision to abolish tax exemptions worth up to Rs200 billion in corporate income tax to meet the stringent conditions laid down by the IMF.

Furthermore, the upcoming Financial Action Task Force (FATF) meeting weighed on investors’ sentiment as a result they resorted to cautious trading. The FATF is due to take decision on whether Pakistan will enter the white list or not. Interestingly, the trend reversed on the last trading day of the week as a host of positive results announced during the session allowed bulls to take control. “We expect the market to remain positive in the upcoming week given continuation of the result season, where we expect healthy earnings,” stated a report from Arif Habib Limited.

Average daily traded volume plunged 19% week-on-week to 595 million shares while average traded value clocked in at $159 million, down 6% on a week-on-week basis.

In terms of sectors, positive contributions came from technology and communication (250 points), cement (138 points), automobile assembler (76 points), fertiliser (57 points) and oil and gas exploration companies (48 points).

On the flip side, negative contribution was led by commercial banks (214 points), power generation and distribution (97 points) and tobacco (6 points). Scrip-wise, positive contributors were TRG Pakistan (209 points), Lucky Cement (124 points), Millat Tractors (90 points), Systems Limited (40 points) and Oil and Gas Development Company (35 points), while negative contributors included HBL (164 points), Hubco (73 points), and MEBL (38 points).

Foreign selling continued this week clocking-in at $0.6 million compared to a net sell of $3.2 million last week. Selling was witnessed in commercial banks ($5.1 million) and technology and communication ($1.4 million). On the domestic front, major buying was reported by companies ($5.5 million) and individuals ($4.9 million).

Among other major news of the week was; textile exports increased by 8% year-on-year during 7MFY21, inflows into Roshan Digital Account hit $500 million and foreign reserves with the SBP declined by $59 million.

Published in The Express Tribune, February 21st, 2021.

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