LAHORE - After dust settling over results of the general elections, the investor base now has set eyes on the economic policies of the upcoming government, considering Pakistan's burgeoning twin deficits and depleting reserves.

With talks over the new government keeping all options of financial inflows open, including any potential IMF package, warning from the United States against IMF bailout that could aid China dented investor confidence, bringing KSE-100 down by 2 percent in a single trading session.

However, gradual recovery during the rest of the trading sessions limited KSE-100 index losses to 0.7 percent WoW to close at 42,505 level. Volumes improved during the week as average daily turnover increased by 21 percent WoW to 284mn shares, while value traded increased by 37 percent WoW to $96million.

Foreigners remained net sellers during the outgoing week as well, with selling witnessed in the Banking and OMCs sector. Net selling from FIPI has accumulated to US$69million during FY19 YTD and $204million during 2018 YTD. With PKR appreciation against the greenback and dip in international coal prices, the Cement sector (+0.2 percent WoW) was one of the outperformers during the week, while rise of 4 percent in pharmaceutical prices led investor interest towards the Pharma sector (+0.8 percent WoW). On stock-wise performance, Agritech Ltd (AGL, +15 percent WoW) outperformed the benchmark on news of gas supply to the shut plant.

In addition, Fauji Foods (FFL, +17 percent WoW) and Fauji Fertilizer Bin Qasim (FFBL, +5 percent WoW) also rallied on news of Inner Mongolia Yili Industrial Group Co expressing interest to acquire 51 percent of FFL.

Experts said that Pakistan equities started the week on enthusiastic note where index gained 1.8 percent in the first session, which was a succession of post elections rally. However, after gaining 3k points in four consecutive sessions in an election frenzy, investors later resorted to profit-taking.

They said that US Secretary of State Mike Pompeo's warning that Pakistan should not use IMF bailout fund for any Chinese debt repayment dented investors' confidence to some extent.

To add insult to the injury, poor earnings announcement by Pakistan's two (HBL & UBL) of top five banks having cumulative market capitalization of $3.5bn further spoiled the market's sentiments.

PSO went up by 4.3 percent during the week as the market is expecting resolution of circular debt, of which PSO would be the prime beneficiary. Further, power sector added 62.4 pts over the week as they will also benefit from the same.

During the week, Foreigners remained net sellers to the tune of US$14.6million as against net selling of $0.4million seen during same period last week. On the local front, Individuals were net buyers amounting to $26.4million while mutual funds were net sellers amounting to US$7.1million. 

During the week, Synthetic Products Enterprises (SPEL) reported its 4QFY18 result, posting an EPS of Rs1.24, down 10 percent YoY compared to EPS of Rs1.38 in 4QFY17. The company's sales grew by 17 percent YoY in 4QFY18. However, decline in gross margins, down 7ppts YoY to 20 percent and higher financial charges, up 68 percent YoY during the outgoing quarter led to earnings decline. SPEL also announced final cash dividend of Rs1/share.

During the week, the total liquid foreign exchange reserves of Pakistan increased by $1.3billion WoW as of July 27, 2018. Overall foreign exchange reserves reached to $17 billion and the Country's foreign exchange reserves held by banks rose by $12million and stood at $6.73 billion level.