Lahore - The stock market remained range bound during the week with some profit-taking witnessed post strong rally in the first two weeks of the on-going month. Foreigners again turned net sellers with net selling of $7.7 million versus net inflows of $4.1 million recorded in the last week. Of the major sectors (1) Oil & Gas (+2.2 percent weekly on recovering oil prices), (2) Pharmaceuticals (+4.3 percent WoW on encouraging news flow on drug pricing), (3) Cements (+1.9 percent WoW on improving outlook post initiation of full-scale work on CPEC) closed in the green zone. Faizan Ahmed from JS Research said that Electricity (-1.4 percent WoW) and Fertilizers (-2.6 percent WoW on weak urea offtake outlook) lost ground during the week. Overall participation also remained weak with both traded volumes (-4.8 percent WoW) and value (-13 percent WoW) posting declines.

According to experts, triggers were absent at beginning of the week at the local bourse, but uptick in international oil prices and interest in banking stocks boded well for the market. Although profit taking remained the trend, benchmark KSE-100 gained 1.3 percent this week to close above 33,000 index level.

On a sector level, General Industrials, Pharma & Bio Tech and Travel & Leisure were among major gainers as they rose in the range of 4.1-7.0 percent. Major losers were Chemicals, which declined 2.6 percent and Food Producers, which fell 2.0 percent.

Foreigners were net sellers of $7.6 million in the outgoing week. Major buying was seen in Cement sector with net buying of $6.5 million, whereas net selling was seen in Chemicals with selling of $6.6 million.

Oil & Gas Development Company is seeking international partners as investment destinations, company’s CEO stated in an interview. Company is evaluating Iran and few African countries as potential investment avenues. He also stated that oil production is estimated at 46-50k bpd in the next 12 months while gas output will remain unchanged. OGDC is drilling two development wells in Nashpa 6 and 7 that may add up to 5k bpd. He also hinted that the company will incur higher exploration cost in 2H2016.

Pursuant to GlaxoSmithKline Pakistan’s (GLAXO) announcement of demerger of GLAXO’s Consumer Healthcare (CH) business into a separate entity, GSK CH will issue shares equivalent to 30 percent of paid-up capital of GLAXO. There will be no dilution in shareholding of existing shareholders of GLAXO since capital reserves will be used to issue the shares. As of cut-off date, net assets of CH division were Rs0.96 million, which is 7.7 percent of net assets of GLAXO. According to a PSX notice, Summit Bank (SMBL) has indicated interest in acquiring majority shareholding of Burj Bank Ltd and has applied to State Bank of Pakistan for permission to conduct due diligence on the matter.

According to FXTM research analyst Lukman Otunuga, the global markets were injected with violent bursts of volatility this trading week following the string of crucial central bank meetings which heightened risk aversion and left anxious investors on the edge. Erratic movements were viewed across the board with Asian equities meandering between losses and gains as renewed fears over China’s growth coupled with Japan’s negative rate stance encourage investors to flee from riskier assets. These elevated concerns from Asia punished European stocks that were already under immense pressure from an appreciating Euro and ongoing anxieties towards the European Central banks inability to jumpstart Eurozone growth. Lukman Otunuga observed that on the plus side, American markets received a welcome boost from the dovish FOMC statement which slashed expectations of four US rate rises amid the ongoing global turmoil. He said that although the over-extended rally in oil prices may have attributed to the stock market bull-run last week, the fundamentals which have left global stocks depressed still remain unchanged. We must remember that China continues to produce dismal economic data which only reinforces the concerns over its economic slowdown while Japan is engaged in a losing battle with falling inflation. The Federal Reserve was dragged back down to reality and forced to slash inflation expectations while as expected the Bank of England remained on the fence citing external pressures as a barrier for further rate rises. With this horrible cocktail of fading conviction towards the global economy and central banks showing signs of fear towards the current unstable financial landscape, stock markets may be poised for further declines.