KARACHI: Pakistan Stock Exchange (PSX) benchmark KSE-100 index mostly remained in the red territory throughout the week ended March 08, 2019, amid spillover effect from previous week’s confrontation between Pakistan and India. KSE-100 index shed 1.49 percent or 489 points to end the week at 38,950 points.
“Though the de-escalation process started last week with Pakistan offering to help India with investigation, investors remained skeptical. Furthermore, lack of positive triggers kept the sentiment lackluster. Meanwhile approval of the Finance Supplementary Bill 2019 by the National Assembly could not uplift the confidence of market participants,” a report issued by Arif Habib Limited said.
Market participation remained dull as evident from decrease in average daily turnover (ADT) and average daily trading volume (ADTV) by 28.7% and 34.8%, respectively. Foreign investors were net sellers, exhibiting an outflow of $3.5 million.
During the week, cement sector posted a double digit decline of 19 percent YoY in February 2019 sales, where the dispatches settled at 3.3 million MT. Furthermore, the government scrapped the restriction on the purchase of vehicle by non-filers, however, it also levied 10% FED on the vehicle with engine capacity of 1700cc or more.
Additionally, the local bike assemblers increased bike prices to pass on the rising cost impact of imported parts and accessories to the consumers. Ministry of Energy floated Rs200 billion worth Sukuk to partially pay off the circular debt owed to power producers as well as oil and gas utility firms.
Also, the government is planning to introduce another amnesty scheme to bring the undocumented money into the industrial sector.
On the macro front, foreign exchange reserves held by State Bank of Pakistan SBP increased marginally by $80 million to $8.1 billion. As per the SBP, public debt swelled around 12% to Rs27 trillion in January 2019 as against Rs23 trillion during the same period last year.
Furthermore, government has decided to privatize 8 government-owned organizations by the end of 2019 to generate revenue to support liquidity crunch.
“Despite reduction of noise from our eastern neighbor, investors are likely to take a cautious approach. Whereas conclusion of result season could also keep the market range bound. We do highlight that any clarity regarding a potential IMF program can be a positive trigger for the index. We advise investors to go long and focus on value buying,” Arif Habib Limited report added.