Stocks seen jittery as political noise blares on

With the ball and chain of geopolitical tensions growing heavier, stocks dragged their feet in the week amid short bursts of buying and are unlikely to buck the trend soon as the opposition parties are turning up the heat on the government, traders said.

“We believe the market will remain jittery in the short-term on account of geopolitical tensions and rising commodity prices,” said analysts at Arif Habib Ltd, a brokerage house. “Key events to look out for include MPC (Monetary Policy Committee) meeting, FATF (Financial Action Task Force) decision, and an ongoing IMF (International Monetary Fund) review, which will have an impact on the market.”

The brokerage said keeping in view the ongoing result season, certain sectors and scrips were expected to stay under the limelight.

“We advise investors to prioritise long-term blue chip scrips only,” the brokerage report said.

The week commenced on a positive note as Russia and Ukraine entered negotiations; however, things turned for the worse as talks broke down, which caused global crude oil prices to soar past $114/bbl.

Moreover, an announcement of an industrial package triggered mid-week buying, albeit the positive momentum could not sustain for long and the market plummeted after Russian military invaded Ukraine, which drove the commodity prices to unprecedented highs.

An 82 percent surge in trade deficit (reaching $32 billion) in the eight months of the calendar year 2021 and above 12 percent inflation also kept the index under pressure.

At Pakistan Stock Exchange (PSX), the KSE-100 Shares Index closed at 44,551 points, rising 567 points or 1.2 percent, week-on-week.

Average volumes clocked in at 215 million shares, down 5 percent, week-on-week, while average traded value settled at $43 million, up 12 percent week-on-week.

Foreign selling continued this week and clocked in at $0.97 million compared to a net sell of $3.24 million last week. Major selling was witnessed in E&Ps ($1.5 million) and banks ($1.4 million).

On the local front, buying was reported by banks ($2.4 million) followed by brokers ($2.1 million).

Wasil Zaman, an analyst at JS Research, said after posting a sharp decline last week owing to the Russia-Ukraine crisis, the market remained in a recovery trend throughout the week amid Prime Minister’s relief package announcement increasing from 43,984 points to 44,803 points before closing at 44,551 points.

He said the E&P sector gained the most during the week, increasing by 8.4 percent week on week, driven by world crude oil prices that peaked $111/bbl.

Among the underperformers were the textile sector and the cement sector.

Sector-wise positive contributions came from oil & gas exploration companies (402 points), technology & communication (129 points), fertiliser (95 points), chemical (24 points), and power generation & distribution (19 points). Stocks that supported the index included PPL (169 points), OGDC (136 points) TRG (117 points), POL (74 points), and EFERT (37 points).

Major laggard sectors included cement (-67 points), oil & gas marketing companies (-12 points), insurance (-12 points), automobile assembler (-11 points), and leather & tanneries (-8 points).

Stocks that weighed on the index were LUCK (-39 points), MCB (-34 points), PSO (-18 points), DGKC (-17 points), and DAWH (-16 points).

Besides, the political situation in the country remains critical as opposition parties have launched a long march amid talks of a no-confidence motion against the Prime Minister.