No-trust vote to set market tone

Stocks are seen shy of any sharp movements next week as investors are most likely to steer clear of risky trades to blunt their portfolio losses, wondering what would the impact of a successful no-confidence vote be on economy and capital markets, traders said.

Analysts say given the world market gyrations, coming from war in Eastern Europe, soaring commodity prices and the central bank’s hawkish lean in the next monetary policy meeting are unlikely to allow investors apply their playbooks.

KSE-100 Shares Index, the benchmark of the Pakistan Stock Exchange (PSX), settled at 43,551 points, gaining 522 points, up 1.2 percent, week-on-week.

Week-on-week, average volumes shrank 17.4 percent to 143.7 million shares, while value dipped 1.5 percent to $25.8 million.

“We expect the market to remain range-bound next week due to political unrest and the upcoming vote of no confidence against Prime Minister,” said Arif Habib Ltd in a weekly market report.

“On the international front, any de-escalation in Russia-Ukraine tensions could propel a rebound in markets.”

The brokerage said the investors would also remain wary of high commodity prices down the line.

“Any indication of a downtick in oil prices would also aid the sentiment in the local bourse,” it said.

This week the market remained sluggish due to domestic political uncertainty and slow progress on IMF negotiations.

Although the market gained some momentum cheering a 78 percent month-on-month contraction in the February’s current account deficit, a landmark agreement on the Reko Diq between the federal government, the government of Balochistan, and Barrick Gold Corporation, the rally turned out to be short-lived.

Rising cut-off rates in the T-bills auction, signaling monetary tightening, as well as rupee weakening to its historic low, crossing the 181/dollar mark, kept trade on a tight leash.

Foreign selling that continued this week reached $4.12 million, compared to a net sell of $4.90 million last week. Sectors that saw major selling were banks ($5.9 million) and oil and gas exploration & production ($0.8 million). On the local front, major buyers were mutual funds ($5.3 million) followed by individuals ($2.6 million).

Positively contributing sectors included fertiliser (160 points), cement (97 points), power generation & distribution (57 points), commercial banks (56 points), and chemicals (47 points). Stocks that underpinned the index included HBL (93 points), LUCK (84 points), FFC (72 points), TRG (64 points), and HUBC (52 points).

Laggard sectors included automobile parts & accessories (-16 points), paper & board (-6.95 points), miscellaneous (-6.29 points), oil & gas exploration (-4.02 points), and insurance (-2.58 points). The major losing stocks were SYS (-42 points), UBL (-41 points), BAHL (-25 points), THALL (-16 points), and HMB (-11 points).

Muhammad Waqas Ghani, an analyst at JS Research, said after posting a sharp decline last week owing to political uncertainty and Russia-Ukraine issue, the market exhibited a recovery trend the outgoing week that started on a positive note in response to the encouraging current account deficit numbers for February.

“The market, however, remained volatile later in the week as cautious investors awaited some clarity on the political front,” Ghani said adding, evident from the drop in volumes.

In the outgoing week political front remained heated on account of the no-trust motion.

Moreover, International Monetary Fund reiterated its demand for reforms in personal income tax to improve revenue collection, while it also expressed its doubts over the financial implications of the prime minister's relief package and the tax the amnesty scheme.