Stock Watch- KSE-100 index ends week on a positive note, but market stability still to be seen.

Summary

"Things are getting better" says Governor State Bank of Pakistan (SBP) last Thursday July 11 at an interactive dialogue with the President World Economic Forum, Borge Brende, arranged by Pathfinder group. This week on Monday SBP's Third Quarterly Report says that despite stabilization phase led by demand management policies, vulnerabilities in the inflation, external and fiscal sectors persisted, which suggest that current stabilization agenda needs to be reinforced with deep-rooted structural reforms.

The appointment of Ms. Shamshad Akhtar former governor of SBP as advisor and the rumors of removal Shabbar Zaidi Chairman Federal Board of Revenue (FBR) and then clarification by the government put questions in the mind of investors as to Will the Hafeez-Shabbar-Baqir formula work Has policy rate attained its peak Will the exports (ever) rise These are some of the questions dwelling in the minds of investors and creating uncertainty. Besides economy damaging news of $5.9 billion penalty awarded in the terminated Reko Diq mining contract. Court cases have so far not yielded any recovery of looted wealth, while political activism is on the rise.

The stock market as such has no clear direction and is in a depressed mode. During the week the market reached its lowest level and trailed 32,000 level to close on Friday at 32,458.77 shedding 1,214 points. The average volume was 105m an improvement over last week of 51m shares. The foreigners remained buyers with $6.43m while Mutual Fund were sellers by $19.26m. The market capitalization eroded by Rs.230 billion to Rs.6.575 trillion.

The stock market opened on Monday with the fear of rise in policy rate to be announced on Tuesday by the SBP as market has this expectation as inflation rate were increasing. During the day, the KSE-100 Index dropped by 714.44 to close at 32,958.35. The uncertainty about traders strike also led to decline in the Index. The volume increased to 69m.

On Tuesday, there are rumors in the market for no policy rate change to be announced, which led the market to close flat with increase of Index by 13.67 points to close at 32,972.02. The volume surged to 139m.

The market continued with modest gain of 9.97 points on Wednesday to close at 32,981.99 but volume declined by 20% to 112m.

On Thursday, the stock market again came down by 672 points as investors remained haunted by the IMF program. Market started positively but soon succumbed to selling pressure to close at...