Stocks to remain sandwiched between local, geopolitical risks

Stocks wrapped up another roller-coaster week with losses and are seen staying the course as risk-averse players are constantly reassessing game plans amid volatile home politics and the war raging in Eastern Europe, traders said.

Analysts at Arif Habib Ltd, a brokerage house said domestic political unrest together with opposition’s planned long march against the government, might keep the bourse under pressure.

“A key event to look out for is the OIC meeting.” On the international front, however, any de-escalation by Russia and successful negotiation with the West may push the commodity prices down, which will improve the sentiment of the local bourse, the brokerage said in a report.

Concerns over fallouts of Russia-Ukraine war together with prevailing political tensions within the country weakened the stocks at the outset of the week.

Although, some mid-week net-buying did occur as investors cheered a dip in global oil prices -WTI and Brent fell below USD 100/bbl mark- together with chances of an armistice in Eastern Europe.

In particular, the cement sector came in the limelight after a decline in coal prices. Albeit, as the week neared its end, the bourse failed to sustain gains as rupee hit historic low, breaching Rs180/dollar mark, and crude oil started swinging up again.

Week-on-week, the market settled at 43,030 points, losing 777 points or 1.42 percent, while average volumes came in at 174 million shares, recording a drop of 19 percent, and average value settled at $26 million, slipping 32 percent week-on-week.

In the outgoing week, foreign investors sold equities worth $4.90 million compared to a net sell of $3.13 million last week. Among major offloaders of stocks were banks ($6.0 million) and oil marketing companies ($0.7 million).

On the local front, banks and DFIs (development finance institutions) picked up $4.4 million shares, followed by other companies that invested $2.9 million in the capital market.

Sectors that dragged the index down included oil & gas exploration companies (310 points), banks (127 points), technology & communication (79 points), oil & gas marketing (42 points), and cement (39 points).

Stocks that dented the index big time included PPL (-140 points), OGDC (-103 points), TRG (-84 points), HBL (-63 points), and MCB (-43 points).

The major supporting sectors were fertiliser (96 points), food & personal care products (15 points), and leather and tanneries (14 points), while scrip-wise positive contribution came from FFC (91 points), EFERT (58 points), and BAHL (32 points).

Analyst Wasil Zaman at JS Research said the volatility prevailed throughout the week as political uncertainty and implications of Russia-Ukraine war deterred investors from dropping their guard.

In the week, SBP released private sector credit off-take data indicating year-on-year growth of 116 percent during 8MFY22 to Rs874 billion, while textile exports as per PBS posted a growth of 26 percent to $12.6 billion in the same period.

Moreover, FDI numbers posted a growth of 6 percent year-on-year in 8MFY22 to $1.26 billion.

ECC approved fertiliser subsidies and a higher wheat support price was announced by the government. On the international front, IMF trimmed its global growth forecast by 0.5ppts to 4.4 percent citing the global impacts of Russia-Ukraine war, while the US Federal Reserve hiked the interest rate higher by 0.25 percent.