KSE100 Monthly Review: Struggle with noisy politics

April 1, 2021 (MLN): After having lost about 1.1% of its value in Feb’21, the benchmark KSE-100 index has further slithered 1,277 points during March’21, down by 2.78% MoM to close at 44,587 points.

The host of positive events such as improving external account position, rupee appreciation, IMF disbursement of US$499mn, the introduction of revised Refinery policy, and successful issuance of Eurobond failed to lift investors’ sentiments as political noise (Senate elections, changes in cabinet) kept the KSE-100 index into a bearish trend.

Alongside this, the severity of COVID-19’s third wave (cases/infection averaged at 2,954/ 7.2% against 1,248/ 3.4% last month), rising oil prices, and the subsequent risk to external account as well as looming up of the CPI reading, kept the market under pressure. Meanwhile, withdrawal of certain corporate tax exemptions on IMF’s condition for the resumption of $6 billion Extended Fund Facility and delay in disbursement of first settlement installment to the IPPs further smashed sentiments at the index.

Amongst major sectors, the Cement dragged the most points from the benchmark index by 441 points. According to the report by Spectrum Securities, the decline is attributable to the proposed removal of several tax exemptions enjoyed by the construction sector. The Oil & Gas Exploration sector was second in the queue which eroded 190 points as the delay in the payment of circular debt remained the major concern for the investors.

The other important sectors that underperformed the market during the month include Fertilizer (-175 points), Textile Composite (-151 points), and Pharmaceuticals (-147 points).

On the other hand, Technology & Communication, Auto Assembler, Chemical, Leather & Tanneries, and Refinery sector outperformed during the month.

Company-wise, scrips of LUCK (-201 points), ENGRO (-190 points), HUBC (-97 points), DGKC (-79 points), and HBL (-76 points) turned out to be the most disappointing ones.

Moreover, during the month, 31 companies traded in green while 68 landed in the red zone. The All-Share Market Cap declined by nearly USD246.37 million to USD 51.66 billion, i.e. 0.47% lower than the previous month. In terms of PKR, the All-Share Market Cap dropped by Rs.314.95 billion to Rs.7.89 trillion, i.e. 3.84% lower as compared to the last month.

Figures released by NCCPL showed that foreign investors sold a net USD8.47 million worth of stocks during the month with foreign corporates doing the bulk of selling @ USD13.5 million. This was majorly offset by purchasing of stocks worth USD4.94 million by Overseas Pakistanis.

On the local front, Insurance Companies purchased USD15.8 million worth of stocks, followed by USD11 million worth of stocks bought by Individual investors. Other significant transactions included USD16.8 million and USD10.68 million worth of stocks sold by Mutua Funds and domestic Companies.

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