The stock market managed to stop its fall as strong corporate earnings coupled with positive sector-specific news and foreign buying resulted in the benchmark KSE-100 index closing marginally positive during the week ended February 20.
The KSE-100 index fell 713 points in the previous week as investors resorted to profit-taking and foreigners continued to offload their investments at the bourse. However, foreigners made a strong comeback this week and were net buyers, resulting in improved sentiments; pushing the index up by 50 points by the end of the week.
The week started off on a negative note and that trend continued for the following two days as the index fell to 33,719 points at the end of trading on Wednesday. However, the mood changed on Thursday and the market reacted positively to corporate result announcements. The index went on to close at 33,993 points at the end of trading on Friday.
The corporate earnings season entered into full swing this week with several heavyweight companies unveiling their results. Engro Corporation led the way with earnings meeting market expectations and avoiding the rumoured impairment losses, which had put the stock under pressure in the previous week.
The company also announced its plans to set up coal-mining and power generation ventures in Thar and also revealed that its LNG terminal would become active in March. Engro stock contributed 62 points to the KSE-100 gains as its price rose 5% during the week.
Cement stocks came next with DG Khan Cement, the country’s third-largest cement manufacturer, announcing earnings above expectations. However, the company also revealed its plans to set up a plant near Karachi and make the entry into the southern region.
The news created panic in the market as it is likely to lead to a breakdown in the cement price agreement between thelargest manufacturers, resulting in a price war and subsequent erosion of margins.
The sector, as a whole, fell 2.7% with Lucky Cement and DG Khan Cement knocking off 61 points.
The index was, however, supported by the return of foreigners as net foreign buying stood at $9.33 million for the week as compared to an outflow of $10.5 million in the previous week. In the absence of triggers in coming weeks, the foreign flows will be a major factor in the direction of the bourse.
Average trading volumes plunged 22.1% and stood at 211.9 million shares per day. Average daily values suffered a similar fate and were down 30.1%, standing at Rs11.6 billion. The market capitalisation stood at Rs7.69 trillion .
