Stocks edge higher in tumultuous week

KARACHI: The stock market commenced the outgoing week on a negative note as participants expected an interest rate hike by the central bank.

Arif Habib Ltd said the noise on the political front fed the negative momentum. However, shares witnessed a rally after the Monetary Policy Committee of the central bank announced a lower-than-expected jump in the interest rate.

Meanwhile, commitment of funds worth $2 billion from Saudi Arabia gave a boost to the bullish sentiment as bridging the external financing gap remains one of the conditions for completing the ninth review of the International Monetary Fund (IMF) programme.

The trade deficit plummeted by 60 per cent year-on-year to $1.46bn in March, lowest since February 2015. However, the momentum proved short-lived after Finance Minister Ishaq Dar cancelled his trip to the United States to meet the World Bank and IMF teams.

The rupee depreciated against the dollar by 0.22pc on a weekly basis to close at 284.42.

As a result, the stock market closed at 40,050 points, up 49 points or 0.12pc from a week ago.

Sector-wise, positive contributions came from oil and gas exploration (149 points), technology and communication (90 points), power generation and distribution (45 points), fertiliser (41 points) and cement (32 points).

Sectors that contributed negatively were auto assembling (22 points), tobacco (17 points) and commercial banking (14 points).

Scrip-wise, positive contributors were Pakistan Petroleum Ltd (71 points), Oil and Gas Development Company Ltd (69 points), Systems Ltd (51 points), the Hub Power Company Ltd (43 points) and TRG Pakistan Ltd (40 points).

Negative contributions came from Bank AL Habib (36 points), Millat Tractors Ltd (19 points), Pakistan Tobacco Company Ltd (17 points), Javedan Corporation Ltd (eight points) and Ghani Glass Ltd (eight points).

Foreign buying continued in the outgoing week and clocked in at $4.7 million versus a net sale of $0.15m a week ago. Major buying was witnessed in exploration and production ($3m) and banks ($0.8m). On the local front, selling was reported by insurance ($4.8m) and companies ($2.8m).

According to AKD Securities Ltd, the stock market is expected to remain jittery until some clarity emerges on the IMF front. Investors’ confidence may also be restored if the level of political tension comes down, it added.

“Until then, we advise investors to take a cautious approach… we continue to advocate the stocks with dollar-denominated revenue streams — technology and exploration and production sectors — to hedge against the currency risks.”