KARACHI (DNA) – Host of key financial developments during the outgoing week kept the ‎investors to stay away from the market which lowered the volume with the index finding ways to ‎score big checked by continuous selling pressure from the foreign investors which totaled at 51 million ‎dollars during the period.‎

‎The KSE-100 index declined by 0.9 percent or 373 points to close at 40,496 during the outgoing week ‎where average daily transactions in the bourses declined by 3.1 to 152 million shares on week on week ‎basis. Foreign investors offloaded equities worth $51.1 million during the week, where most of the ‎selling was concentrated in Banks amounting to $21.5 million and Cements $21.1 million. ‎

On domestic side, Insurance and Mutual Funds provided most of the liquidity to the market. Most of ‎the foreign selling was concentrated in the last day of the outgoing week, nearly 64 percent due to ‎deadline of the MSCI rebalancing, said an analyst from BMA Capital Management.‎

‎ The US dollar opened on Friday suddenly shot up to Rs 142 and traded as high as Rs 144 during the ‎day before closing at Rs 139 (up 4% from previous day). This takes rupee cumulative depreciation to ‎‎26% during 2018 to-date. In the Press Conference held in the latter half of the day, the Finance ‎Minister attributed the latest round of Rupee depreciation to 1) increasing foreign loans, 2) depleting ‎foreign exchange reserves, 3) low exports and 4) artificial cap on the value of dollar in the previous ‎government regime. ‎

KSE-100 index sheds 373 points during outgoing week

State Bank raised Policy Rate by 150bps to 10% which was in line with expectations reflected by ‎money market yields but higher than equity market consensus of 100bps. The decision to raise ‎interest rate was based on 1) inflationary pressures and expectations, 2) relatively lower real interest ‎rates, 3) high Twin Deficits, and 4) hawkish monetary policies adopted by developed economy.‎

‎ During the week, Brent Crude declined on the back of higher than expected US inventories. As a ‎result, Exploration and Production (E&P) stocks were down during most part of the week but ‎recovered on Friday after the latest round of rupee depreciation – Oil and Gas Development Company ‎‎(OGDC), Pakistan Petroleum (PPL), Mari Petroleum (MARI) and Pakistan Oilfields (POL) returned 2.6 ‎percent, 3.4 percent, 3.6 percent and 1.1 percent, respectively while the sector was up 2.8 percent.‎

An analyst from Habib Metro said that the market to show a mixed trend for upcoming sessions pricing ‎in the impact of rupee depreciation, therefore, we advise investors to stay cautious and limit their ‎exposure to stocks that offer a currency hedge and do not carry high leverage.‎

While an analyst from BMA Capital Management said a key development at the end of the last trading ‎day was the announcement of above expected policy rate hike by the central bank (up 150bps to ‎‎10%). The same is expected to trigger investors’ interest in banking scrips in the upcoming week while ‎leveraged names may face pressure.

A key event to watch out for next week is the meeting of OPEC ‎and like-minded non-OPEC members (Russia), scheduled on 6th-Dec’18, where a production cut is ‎expected in order to stabilize the oil market. The same may translate into higher int’l oil prices and ‎potentially trigger a rally in listed E&P sector, he explained.‎