While upward movement in oil prices (Brent up 5.6%MoM) restricted losses to some extent, continued foreign selling (net outflow of US$39.5 million), lackluster results announcements and adverse news flows (regulatory action, legal challenges) propelled bearish pressures.
Most of the sectors were on the downward spree except commercial banks, posting decent earnings announcements, up 2.9%MoM. All other sector posted decline that included Automobiles (down 8.3% on strengthening Yen), Fixed Line Telecommunication (down 5.7% on disappointing CY15 earnings) and Food Producers (down 5% on expected slowdown in earnings growth).
An AKD Research Report hints market sentiments during March 2016 will be driven by: 1) uncertainty on the political front particularly due to the actions being taken by law enforcing agencies against the brokers’ fraternity, 2) foreign selling and 3) Monetary Policy announcement within the month. Expectations are building that with declining PIB yields (down 60bps in the recent auction) and lower than expected inflation number, reduction in discount rate can’t be ruled out.
Taking charge after a very long time, the index heavy-weight, banking sector led the rally during the month under review. The outperformance was a function of above expected earnings announcements and year-end payouts.
Cements, on the other hand, remained on the sidelines, despite positive earnings surprises by players such as MLCF, DGKC and FCCL.
Strengthening of Yen against PkR (down 6.7%during the month) reversed gains for Automobile (down 8.3%MoM) making it one of the worst performing sectors.
With an outflow of US$39.5 million during the month under review foreigners continued to trim their equity positions taking FYTD net outflow to more than US$330 million. This marks the eighth consecutive month in which there has been a net outflow of portfolio capital with selling largely being a function of the global portfolio re-alignment strategy.
While foreign flows will continue to play a major role in determining market direction/participation going forward, analysts believe the Monetary Policy announcement due this month is of importance where a few market participants (particularly some banks) are now eyeing a rate cut.
Any surprise, in this regard should bring renewed interest in cyclical and yield plays. Apart from this, clarity on the regulatory front particularly with regards to implementation of reforms (Amendments to SECP bill, Licensing of operations regulations for NBFCs, Mutual Funds amongst others) would go far in renewing foreign investor participation. Trinkets of news flows surrounding the run-up to the budget FY17 are likely to drive performance accordingly.
- Achieving food security in Pakistan
- Announcement of policy rate by State Bank of Pakistan
- Defending Pakistan's territorial integrity
- Dirty oil politics
- Dishonest Western Media
- Energy Crisis in Pakistan
- Financial Inclusion program of SBP
- Geo political importance of Pakistan
- Geo Politics in South Asia and MENA
- Global Oil Glut
- Importance of remittances in pakistan's economy
- Investing in Commodities
- Investing in Pakistan stock market
- Investing in Pakistan Stock Market
- Investment opportunities in Pakistan
- Islamic Finance in Pakistan
- Making textile insutry robust
- Mutual Funds in Pakistan
- Oil and Gas Production in Pakistan
- Pak Afghan Relations
- Pakistan Foreign Policy
- Pakistan Stock Market Weekly Review
- Perforamance of exploration & production companies
- Performance of cement industry in Pakistan
- performance of commercial banks in Pakistan
- Performance of commerciial banks
- Performance of energy sector companies
- Performance of Fertilizer Industry in Pakistan
- Performance of insurance companies in Pakistan
- Performance of power generation companies
- Performance of textile sector of Pakistan
- Robust agriculture in Pakistan
- State of Pakistan Economy
- State of Pakistan's economy
- State of Pakistan's Economy
- Taxing POL consumers
- Textile Exports of Pakistan
- US-Saudi oil war
- War between shale oil producers and OPEC
- Warehouse Receipt Financing in Pakistan
- Who controls this world