Stocks stay gloomy on geopolitical tensions

KARACHI: Tensions with Iran and pre-poll uncertainties kept investors unsettled throughout the outgoing week despite the influx of positive economic news as a result the benchmark KSE 100-share index came under intense selling pressure and settled well below 64,000 level.

After suffering losses for four consecutive sessions due to simmering border tensions with Tehran over tit-for-tat strikes on the terrorist hideouts on each other’s territory, the market staged a massive intraday rally in the weekend session, but profit-takers entered the market allowing modest gains by the end of trading on Friday.

Arif Habib Ltd said the inflow of a $705m tranche from the IMF, rollover of a $2bn deposit by the UAE government for another year and 1.6pc expansion in large-scale manufacturing in November 2023 did support market sentiments but fears of growing geopolitical tensions dampened sentiments.

The country also posted this fiscal year’s first current account surplus of $397m in December 2023 and the net foreign direct investment (FDI) witnessed a growth of 35pc year-on-year settling at $863m in 1HFY24.

Furthermore, an investment agreement for over $3bn was also signed between Pakistan and Dubai to boost cooperation in railways, economic zones and infrastructure development.

Meanwhile, the SBP’s reserves dipped by $127m in the week ending on Jan 12 taking its holdings to $8bn, but the rupee continued its bullish spell reaching Rs280.36 against the dollar, appreciating by 0.16pc week-on-week.

As a result, the KSE-100 index closed at 63,282 points after losing 1,335 points or 2.1pc week-on-week.

Sector-wise negative contributions came from cement (230 points), oil & gas exploration companies (222 points), power generation & distribution (148 points), automobile assembler (82 points), and miscellaneous (78 points). Meanwhile, the sectors which mainly contributed positively were fertiliser (42 points).

Scrip-wise negative contributors were Pakistan Petroleum Ltd (234 points), Lucky Cement (103 points), Hub Power Company Ltd (100 points), Millat Tractors Ltd (91 points) and Habib Bank Ltd (68 points).

Meanwhile, scrip-wise positive contributions came from Engro Corporation (104 points), Meezan Bank Ltd (54 points), Mari Petroleum Ltd (45 points), United Bank Ltd (39 points) and Pakistan Oilfield Ltd (31 points).

Foreigner selling was witnessed during the outgoing week, clocking in at $1.19m compared to a net buy of $1.88m the preceding week-on-week. Major selling was witnessed in banks ($2.6m) and E&P’s ($1.4m).

On the local front, buying was reported by insurance ($11.5m) followed by companies ($1.8m). Average volume arrived at 389m shares down 30.5pc week-on-week while the average value traded settled at $49m, dipped by 13.7pc.

Going forward, the stock market is seen drifting higher on the back of positive quarterly corporate results, which will be closely monitored by investors. Also, the government will conduct the auction for Ijarah Sukuk on Jan 23 at PSX, targeting an amount of Rs100bn.