LAHORE - The KSE-100 Index declined by 4.3 per cent weekly to close below the psychological level of 30,000 points. Major reason behind the massive fall this week is selling by foreign funds and local mutual funds and roll-over of future contracts. Amongst key sectors, major selling was seen in cement, chemicals, automobiles and non-life insurance which were down by 6 per cent WoW respectively.

Average daily volumes improved by 24 per cent WoW while average daily value increased by 12 per cent WoW to Rs9.4bn (US$92.5mn). This was the fifth consecutive week of negative closing and during this period the index has decreased by 12 per cent. This week foreigners sold shares valuing US$65mn and bought US$50mn with net selling of US$15.1mn. Local mutual funds were net sellers of US$10.5mn while local banks were net buyers of US$20.3mn.

Bank of Punjab (BOP), Packages (PKGS), Kohinoor Textile Mills (KTML) and Pak Suzuki (PSMC) were the major losers during the week, while Pakistan Tobacco (PAKT) and Murree Brewery (MUREB) were the top performers.

After the 50bps reduction in policy rate, benchmark lending rate (6-month KIBOR) fell to 7.95 per cent on Friday from 8.12 per cent last week, after a gap of 10 years. However, T-Bill yields increased to 7.97 per cent from 7.75 per cent last week.

Moody’s revised the outlook on Pakistan’s foreign currency Govt. bond rating to positive from stable, based on a strengthening external liquidity position and continued progress towards fiscal consolidation and structural reform.

In the PIB auction held on Wednesday, Govt. accepted bids with a total value of Rs46.4bn in 3, 5 and 10-year instruments, against target of Rs50bn. Cut-off yields declined in the range of 20-40bps. First ship of LNG carrying 147,000 cubic feet arrived at Karachi port. Initially, the re-gasified LNG (RLNG) will be supplied to four Independent Power Producers (IPPs). Government on Thursday said that it will dispatch a top civil-military delegation to Saudi Arabia following Riyadh’s request that it join a coalition to defend any threat to the Gulf kingdom. Fatima Fertilizer announced 2014 earnings of Rs9.3bn (EPS Rs4.4), up 15 per cent YoY. Growth in earnings was due to improved production volumes, higher product margins and deleveraging. The company announced final cash dividend of Rs2.75/share.

According to statistics, textile exports reported a dismal trend in Feb’15 where the country’s exports declined by 3 per cent during the month to clock around USD1.09bn as against USD1.12bn in corresponding month last. While on cumulative basis, the country’s textile exports for 8MFY15 remained flattish at USD9.2bn as against USD9.1bn, thereby posting a nominal increase of 0.5 per centYoY during the period. Value added textile categories such as Knitwear, Bed-wear, Garments and Home Textiles posted decent growths during 8MFY15, increasing by 5 per cent-14 per cent while non-value added items raw cotton, yarn and cotton cloth have posted double digit declines over the same period, keeping the overall exports in check. The yarn margins have remained flattish MoM during the month of Mar’14 as the yarn prices have stabilized around PKR1,311/kg in the local market. Experts continue to prefer NML over NCL and GATM due to its concentration in higher end of value chain and lower dependence on gas. On last closing, NML offered upside of 47 per cent at our TP of PKR161/sh.

During the week Moody’s Investor Service revised its outlook on Pakistan’s foreign currency government bond rating to ‘positive’ from ‘stable’, while affirming its Caa1 rating. The rating agency noted (1) stronger external liquidity position given significant improvement in State Bank of Pakistan’s reserves (to US$11.2bn from US$3.2bn in Jan 2014) and easy financing of a lower Current Account deficit via bond issues, IMF disbursements, CSF inflows and privatization proceeds, (2) efforts towards fiscal consolidation, targeting fiscal deficit of 4.9 per cent of GDP in FY15E vis-à-vis 5.5 per cent in FY14 and 8.2 per cent in FY13 and (3) progress in achieving structural reforms and quantitative targets under the IMF program, as key drivers behind ratings upgrade.

Experts said that implementation of reforms/successful completion of IMF program, (2) additional strengthening in external liquidity position and (3) continued fiscal consolidation can provide ratings upgrade for Pakistan going forward.