LAHORE - Pakistan Stock Exchange witnessed dull trading activity during the week with the benchmark KSE 100-index plummeting by 1.2 percent to 46,072 points.

Apart from profit-taking by investors, uncertainties surrounding upcoming federal budget amidst resistance from opposition parties and hearings of key political cases in the Supreme Court hurt investor sentiments during the week. On the macroeconomic front, foreign exchange reserves posted another decline, recording consistent drop since Dec-2017. Interestingly however, foreign investors continued to build position, recording net inflows of $17.1m vis-a-vis $3.4m recorded in the previous week. Most of this foreign buying was witnessed across the board except for OMCs and textile composite sectors where foreign investors ended up as net sellers during the week. Sectors such as autos (up 1.7 percent WoW), insurance (up 1.4 percent WoW), fertilizers (up 0.8 percent WoW), and oil & gas exploration (up 0.1 percent WoW) remained the major outperformers during the week. Other heavyweights such as banks (down 2.7 percent WoW), cements (down 3.5 percent WoW), oharmaceuticals (down 2.6 percent WoW) and chemicals (down 4.0 percent WoW) underperformed the index, ultimately dragging overall index down to end in the red zone.

Experts said that the historic verdict of Supreme Court, where apex court announced “life time ban on holding of public office” for former prime minister Nawaz Sharif and PTI leader Jahangir Tareen led index to fall by 0.6 percent, taking full week index decline to 1.2 percent.

Banking stocks remained top laggards during the outgoing week withholding 372 points points from index, over concerns on the implementation of amnesty and its effectiveness in materialization of foreign inflows.

Moreover, key proposed measure to remove/reduce Gas Infrastructure Development Cess (GIDC) on feed/fuel stock in upcoming budget led to a rally in fertilizer stocks, emerging as top contributor to index (+67pts). Amongst other beneficiaries of potential GIDC reduction Lotte Chemicals (LOTCHEM) and Engro polymers (EPCL) gained 2 percent and 5 percent, respectively during the week.

Activity slowed down during the week as traded volumes fell by 5 percent while traded value was down 30 percent.

Foreigners remained net buyers during the week amounting to $17.5m vs. net buying of $3.6m last week. On the other hand, amongst local investors individuals remained net buyers of $11.9m whereas banks were net sellers of $9m.

During the week, Shield Corporation posted EPS of Rs8.22 for 9MFY18, down by 17 percent YoY due to increase in finance cost by 64 percent YoY to Rs12m and selling & distribution expense by 12 percent YoY to Rs334m.

The government “reallocated” from a major gas pipeline project about Rs15 billion for setting up of LPG air-mix plants in every district of the country a day after the Election Commission of Pakistan (ECP) imposed a ban on diversion of funds and recruitments so such diversions could not be used for political purposes.

The government’s tax amnesty could relieve fiscal and external pressures on the economy “if successful”, said Moody’s, the premier credit rating agency in a release. “The credit-positive scheme is part of the government’s broader tax reform package” the release noted.

In a surprise move, PTI has announced that its government in Khyber Pakhtunkhwa will not present the budget for the next financial year because of the position the party has taken against the PML-N governments at the centre and Punjab that an outgoing government has no mandate to do so.

The auto sector regretted that the government has so far ignored proposals to curb premiums at purchase of new cars, leaving manufacturers to take actions to end this practice at the wholesale and retail level.

Foreign exchange reserves held by the State Bank of Pakistan (SBP) continued to remain under pressure, shrinking 1.4 percent on a weekly basis, according to data released by the central bank.