Stock market at a glance.

Market Review

Despite KSA's announcement of package worth USD21.0bn, the outgoing week remained negative on the back of growing tensions between India and Pakistan. Consequently, the benchmark index closed in red at 40,016pts, during the week, exhibiting a decline of 1.2%WoW. Market participation remained lackluster as evident from decrease in ADT and ADTV by 22.1%WoW and 13.6%WoW, respectively. Foreign investors remained net buyers, exhibiting an inflow of USD3.5mn. Oil import bill increased by 10%YoY to USD8.7bn during 7MFY19 as opposed to USD7.9bn during the SPLY on the back of LNG imports that soared by 75%YoY. Additionally, textile exports increased by only 1.2%YoY in 7MFY19 despite currency depreciation where total exports clocked in at USD7.8bn. Furthermore, cotton production decreased by 6.8%YoY to 10.7mn bales with the lower area under cultivation. Also, ECC ordered SNGP to supply LNG to fertilizer plants - Agri Tech and Fatima Fertilizer - to ensure smooth supply of urea.

Moreover, India slapped an import duty of 200% on Pakistani goods primarily constituting cement and food items. On the macro front, foreign exchange reserves of the country decreased to USD14.8bn from USD14.9bn owing to external debt payment. Additionally, Pakistan's current account deficit shrunk by 17%YoY to USD8.4bn during 7MFY19 as opposed to USD10.1bn. This is mainly because of reduction in trade deficit by 10%YoY in 7MFY19 owing to 5%YoY decrease in imports and 2%YoY rise in exports. On the other hand, fiscal deficit stood at 2.7% of the GDP in 1HFY19 as opposed to 2.2% of the GDP in the SPLY mainly due to increase in expenditure despite cut in development spending. Moreover, FDI decreased by 18%YoY during 7MFY19 on the back of lower inflows from China.

Outlook

Any escalation in Pakistan- India tensions would dampen market sentiments. Additionally, in response to India's imposition of 200% RD on imported goods, Pakistan may retaliate on similar grounds which may affect textile and chemical sectors.

News This Week

Economic highlights and data points

Forex reserves fall to USD14.79bn (The News): Pakistan's foreign exchange reserves fell to USD14.79bn during the week ended February 15, compared with USD14.90bn in the previous week, the central bank reported on Thursday. The forex reserves held by the State Bank of Pakistan (SBP) dropped USD163mn to USD8.04bn.

Trade deficit in goods, services narrows 5.3% in July-January (The News): Trade deficit in goods and...