KARACHI: The market remained lacklustre in the outgoing week as investor participation was at multi-year low amid lack of market moving triggers and release of International Monetary Fund staff report that painted a bleak near-term macroeconomic picture for Pakistan.

The KSE-100 index declined by 518 points (1.51 per cent) over the preceding week to wind up at 33,672. The key development was the receipt of around $1 million from IMF as the first tranche of bailout. On the flip side, investors remained in the grip of fear as the government proceeded with its attempt to carry out documentary measures including imposition of new taxes and crackdown on Benami properties.

Investors also were peeved at the issue of Sukuk bonds for circular debt resolution. The announcement of the State Bank of Pakistan to unveil the monetary policy on July 16 instead of the month end put further pressure on the market on the last trading day. The dispute between Federal Board of Revenue and traders on numerous taxation and regulatory issues mostly decreed in the Finance Bill 2019 took a turn for the worse, with some section of trade and industry calling for a protest strike on Saturday.

Foreigners were net buyers of equity worth $5.91m which was about the same as the preceding week. Their inflows were mainly in cement worth $3m and power generation and distribution of $2.3m. Among local participants, companies were net sellers of stocks valued at $7.6m and mutual funds $5.3m while brokers mopped up shares worth $5.9m.

The average daily volume declined 41pc to 51m shares with the turnover on Thursday recorded at just 40m shares, representing second lowest in five years. Leaders were: Maple Leaf with trading in 15.2m shares; K-Electric 13.3m; Lotte Chemical 11.9m and TRG Pakistan 9m shares. Average traded value clocked-in at $13m, representing drop of 36pc.

Increase in fertiliser prices by Rs110 per bag following an agreement between the government and urea producers stirred positive sentiments and pushed the sector among top performers. Negative contributions were made by: commercial banks which ate away 81 points, followed by power generation and distribution 77 points, oil and gas marketing companies 53 points; automobile 53 points and cement 50 points.

Scrip-wise negative contributions came mainly by Hub Power, lower by 53 points; Pakistan State Oil 37 points, Bank Al Habib 29 points, DG Khan Cement 24 points and Indus Motors 21 points.

Going forward, all eyes are set on the announcement of monetary policy by SBP on July 16 where analysts are expecting hike of between 100 and 150 basis points which is likely to exert more pressure on the market. Release of key figures of current account deficit and detailed trade data are also due in the week. The upcoming visit of the prime minister to US would also be watched for positive takeaways. All in all, most gurus expect the market to remain range-bound.

Published in Dawn, July 14th, 2019