KARACHI: Pakistan Stock Exchange (PSX) Benchmark KSE-100 Index fell 4.8 percent or 1,934 points during the week ended December 7, 2018 to close at 38,562 points mainly due to higher than expected monetary tightening (150bps interest rate hike), global markets sell-off, fears of redemptions from mutual funds and dismal off-take numbers for cement, automobile & oil marketing sectors.
Market activity remained dull during the week with average traded value declining by 18 percent to $53 million in spite of 7.0 percent higher average daily traded volumes, reflecting concentration of activity in penny stocks.
“The market remained jittery during the week due to sudden devaluation of Pak Rupee against greenback and higher than expected interest rate,” a report issued by Arif Habib Limited said.
The bulls rushed in during the week briefly after PM’s assurance that government is working on devising a communication mechanism with the SBP to prevent confusion regarding Pak Rupee depreciation against USD.
However, bears dominated again amid rumors of Finance Minister’s resignation. Furthermore, concerns over falling reserves and rising circular debt kept the momentum lackluster.
Foreign selling continued this week clocking-in at net of $2.5 million compared to a net sell of $51.1 million last week.
During the week State Bank’s foreign exchange reserves further slipped by $560 million to $7.5 billion owing to persistently high Current Account Deficit and external debt servicing in the absence of meaningful financial flows.
E&Ps sector was down 4.8 percent due to uncertainty over production cuts by OPEC in its ongoing meetings.
In the coming week, PM Imran Khan will be visiting Karachi to address macro-economic concerns and take businessmen into confidence. Furthermore, OPEC members and its allies are currently in Vienna to agree on terms regarding oil production, which will have an impact on price of crude oil. Albeit expect the market to be ranged bound next week. Attractive valuations could revive investor’s interest.