LAHORE - The stock market remained directionless this week as the tug-of-war between the bulls and the bears continued with bears winning the battle.

Resurfacing interest rate cut expectations amidst low inflation failed to excite the market as fiscal deficit numbers remained higher than budgeted with year-end numbers expected to exceed target. Strengthening expectations of interest rate hike by FED in December along with spree of foreign selling further fuelled bearish sentiments. With frail volumes (down 5 percent WoW), activity remained mainly concentrated in rumour spurred selective small and midcap stocks as indicated by falling traded value (down 18 percent WoW).

Of the major index heavyweights, oil & gas (-2.5 percent WoW) and banking sector (-0.6 percent WoW) extended marginal losses as international crude oil prices remained volatile with persisting slow downtrend. Other highlights of the week were (1) PM Nawaz extending an official invitation to Vladimir Putin for inauguration of North South gas pipeline, (2) decline in PIBs cut-off yield of up to 18bps in the latest auction, (3) decline in FDI numbers (-24 percent YoY to $351 million in 4MFY16) and (4) China urging Pakistan to speed up progress on CPEC.

Another declining week was seen at the local bourse as the benchmark KSE-100 index declined 0.8 percent WoW to close at the 33,857 index level. Continuous foreign selling, decline in oil prices (WTI crude down 2.3 percent WoW) and lack of any market-moving update kept investors wary from taking any fresh positions.

Average daily volumes declined by 5 percent to 176 million shares while traded value fell by 18 percent to Rs6.6 billion/$62.6 million. Foreigners were sellers this week with net selling of $15.9 million. They offloaded stocks in oil & gas and chemicals sectors with selling of $9.4 million and $5.4 million, respectively.

On a sector level, forestry (paper & board), engineering and financial services increased by 2.0-3.1 percent this week. At the other end were oil & gas and chemicals sectors, which declined by 2.5 percent and 1.3 percent, respectively.

As per latest numbers by Pakistan Bureau of Statistics (PBS), the LSM (large scale manufacturing) index grew by 2.2 percent YoY to 122.5 points in Sept 2015 and 3.9 percent YoY to 120.6 in 1QFY16. The automobile sector was the major contributor to the index’s growth.

European Investment Bank (EIB) will lend $54 million to rehabilitate Warsak dam and its 243MW hydropower station. The repairs are expected to extend the life of the dam by 40 years.

According to news reports, Gourmet foods, a local confectionary chain, has successfully negotiated an investment of Rs3.7 billion in Silk Bank (SILK). The said investment is subject to regulatory approval from the State bank of Pakistan.

As per a KSE notice, the board of directors of National Bank of Pakistan (NBP) has agreed to merge NBP leasing (a fully owned subsidiary of NBP) into the bank, subject to approval of shareholders, SBP and SECP.

As per data from SBP, Pakistan’s current account deficit in 4MFY16 stands at $532 million (0.5 percent of GDP) vs $1.9 billion (2.1 percent of GDP) in the same period last year. For the month of Oct 2015, the deficit stood at $416 million vs a surplus of $299 million in Sep 2015.

According to a notification from SBP, Pakistan’s foreign direct investment (FDI) for the month of Oct 2015 stood at $134.6 million, down 48 percent YoY.

Honda Atlas Cars (HCAR) announced 2Q2015 (Jul-Sep) earnings of Rs726 million (EPS Rs5.1) against Rs587 million (EPS Rs4.1) in the same quarter last year. This result was below market consensus estimates.

HCAR revenue grew by 19 percent YoY to Rs9.7 billion in 2Q2015 as the company sold 6,184 units in 2Q2015 compared to 4,887 units same period last year. Gross profit improved to Rs1.3 billion (+15 percent YoY) in 2Q2015 while gross margins squeezed by 55bps to 13.7 percent in 2Q2015. Experts attributed this decline to likely change in product mix between its variants Honda Civic and Honda City. Gross margins declined despite favorable exchange rate movement as US$ and Pak Rupee (PKR) appreciated against Japanese Yen (JPY) by 16.6 percent YoY and 12.4 percent YoY, respectively. Other income grew by 18 percent YoY in 2Q2015, as the company earned interest on advances received from customers owing to strong car demand.