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BEARS RULE BULLS, KSE INDEX DOWN BY 1.6 PERCENT

KSE-100 Index showed some resilience to the bearish momentum by gaining 119 points to close in green at 48,409 levels yet amid thin market volumes of 212 million all shares during the last trading session of the week. Term

The Index remained under pressure as political noise, low international oil price and stern action by the regulator kept the sentiments in the negative territory. Index closed the week at 48,409pts, down by 1.6% WoW. FIPI registered net outflow of US$11mn. Average volume traded decreased by 21.9% WoW while average value traded decreased by 0.5% WoW.

According to market analysts, there was a widespread impact on the bourse of the US Federal Reserve which increased rates by 0.25%, taking the overnight fund rate to a target range of 0.75% to 1.0%. This was the third hike over the last 18 months and sets the ground up for up-to 50bps further hike in US dollar interest rates during CY17.

The Fed’s decision to tighten interest rates will have ramifications across financial markets with Emerging Markets (EMs) particularly vulnerable. Continued decline in commodity prices in confluence with risks on emerging economies’ currencies could result in continued outflows. Idiosyncratic nature of the Pakistan’s economy saw Pak Rupee (PKR) remaining stable in the three months following the last two rate hikes. However, with pressure building on the currency given ballooning CAD position, we may see PKR ultimately losing against USD.

Oil prices fell on Thursday last after three consecutive positive sessions on concerns about rising oil inventories and production facility. However, Saudi energy minister said on Thursday that OPEC could extend its oil output cut deal if crude inventories continue to surge.

Pak. Int. Cont. Ter. Ltd., Colgate Palmolive, Meezan Bank, Bank of Punjab and Fatima Fertilizer Company Ltd were the major gainers while Habib Metro Bank, Faysal Bank, Ghani Glass, Allied Rental Modaraba, and Pakistan Petroleum were the major losers in the benchmark KSE-100 this week.

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