LAHORE - Pakistan equities continued to extend losses for third straight week after disqualification of Foreign Minister Khawaja Asif which will be a major blow to the ruling party PML-N. Moreover, poor corporate results further dampened investors’ sentiments. Resultantly, market lost 257 points, closing at 45,461 points.

Bank of Punjab (BOP) hit upper cap just after its result announcement, gaining 10 percent in a single session with traded volumes of 9m shares. While Engro Polymers (EPCL) lost 3 percent as investors’ opted for profit taking post disclosure of its anti dumping duties (ADD) on imports of PVC resin.

E&Ps remained top laggards to index and deducted 44 points from index, followed by foods (-40 points) and fertilizers (-29points). Market participation in terms of volumes fell by 6 percent, while value traded was down by 13 percent.

Top 5 scrips including HBL (-1.6 percent), DAWH (-3.3 percent), PPL (-1.2 percent), MCB (-1.4 percent) & POL (-1.3 percent) contributed 60 points to the index decline whereas stocks including BOP (+10.4 percent), FFC (+0.8 percent), HASCOL (+3.1 percent), LUCK (+0.5 percent) & BAFL (+1.3 percent) added 60 points to the index gain.

Experts said that range bound activity was witnessed at the bourse during the week as investors remained wary of the budget; roll-over week also added to the selling pressure. Market participation during the week rose as evident by 9 percent/8 percent increase in ADTO and ADTV to 169m shares and $70m respectively. Unity Foods remained the volume leader driven by strong result posted by the company for 3QFY18.

Foreign investors remained net sellers during the week with net outflow of $2.8m; most of the selling was concentrated in banks ($2.07m) and power ($1.35m) sectors. Amongst local investors, banks and individuals remained net sellers with cumulative outflow of $16.3m while brokers and other organisations reloaded their books, reflecting an inflow of $18.6m.

On macro front, the Ministry of Finance revealed its Economic Survey, where it presented a blatantly positive picture of the economy. While economic progress in the last 5 years was cited as major achievements (13-year high GDP growth rate, inflation remaining in single digits), its macroeconomic outlook on growth appears overly optimistic. That said, twin deficits remain a key challenge though the outgoing government’s economic scorecard falls short of proposing remedial measures.

With the result season approaching its end, next week’s trading activity will primarily be driven by positive budget announcement. Available details on budget FY19 suggest it is broadly positive for the market given tax relief and other positive measures for investment returns. A populist approach is quite visible primarily to the benefit of agriculture, industries and individuals (salaried class).Moreover, amnesty scheme has been expectedly made part of the budget. Another key data point to track next week include CPI number for Apr’18, where it is expected CPI to drop to 2.8 percent.

During the week, Lucky Cement (LUCK) notified exchange about its expansion plan for north, the company has decided to increase the cement production capacity at its Pezu plant by 2.6m tons per annum at estimated cost of ~Rs18b. Additionally, company has decided a green field clinker production facility in Iraq of 1.2m tons per annum at estimated cost of $109m. Both expansion plans will be completed during last quarter of 2019.

Kohinoor Textile Mills (KTML) announced its financial results for 3QFY18, where company reported EPS of Rs2.3, down by 50 percent YoY due to absence of other income in this quarter vs Rs571m in SPLY. Moreover, GP margins of the company went down by 1ppt YoY to 28 percent during 3QFY18.

Tariq Glass (TGL) announced its financial results for 3QFY18, where company reported earnings of Rs325m, up by 53 percent YoY due to increase in net sales by 32 percent YoY and lower effective tax rate of 21.5 percent vs 28 percent corresponding period of last year.

General Tyres (GTYR) announced its financial results for 3QFY18, where company reported EPS of Rs2.6, down by 44 percent YoY, as margins of the company were dented by 5ppts YoY to 22 percent.

Cherat Packaging (CPPL) announced its financial results for 3QFY18, where company reported EPS of Rs3.7, down by 31 percent YoY due to reduced GP margins of 14 percent vs. 20 percent in corresponding period of last year.

Millat Tractors (MTL) announced its financial results for 3QFY18, where company reported EPS of Rs32, flat vs last year. Net sales of the company increased by 5 percent YoY, while margins went down to 21 percent vs 24 percent in SPLY.

Matco Foods (MFL) posted earnings of Rs73m for 3QFY18, down by 35 percent YoY, due to decrease in margins by 4ppts YoY to 14 percent.

Nishat Chunian (NCL) announced its financial results for 3QFY18, where company reported EPS of Rs3, up by 87x YoY due to increase in other income by 3.8x YoY to Rs219mn and increase in gross margins by 4ppts YoY to 20 percent.

Thal Limited notified exchange about its financial results of 3QFY18, where EPS of the company went down by 13 percent YoY to Rs11.3. The gross profit of the company went down by 4.5ppts YoY to 20 percent.