Recovery mode continues as KSE-100 climbs 1,285 points

Oil exploration and banking sectors lead the gains with volumes jumping 30%

KARACHI:

The stock market’s recovery continued as rebounding oil prices and a rally in the banking sector helped the benchmark KSE-100 climb 1,285 points (4.1%) to close at 32,479 during the week ended February 4.

The week was cut short by a day due to the Kashmir Day holiday on Friday, but four days were enough for the KSE-100 index to record a stunning weekly performance. The benchmark index has now closed in the green for 10 consecutive sessions and has gained 1,700 points (5.5%) in the process.

The gains were led by the oil and gas sector, which put in a strong performance on the back of rebounding crude oil prices, and the banking sector, which reacted positively to the State Bank not cutting the discount rate and higher than expected inflation numbers.



The State Bank’s decision to keep the discount rate unchanged did not dampen investor sentiment, while positive news on the macro front in the form of the IMF approving the 11th tranche along with the inauguration of the first portion of the China-Pakistan Economic Corridor contributed positively to the mood at the bourse.

The week started off on a strong note as the market reacted to the unchanged discount rate with the banking sector leading the gains, followed closely by the oil and gas sector. The KSE-100 index rose 579 points (1.85%) on Monday.

Things slowed down a bit the following day as crude oil prices dipped, resulting in clipped gains. However, a stronger bullish sentiment was witnessed on Tuesday and Wednesday, before a strong finish on Thursday was fueled by rebounding oil prices, resulting in the index climbing 394 points (1.2%).

Oil prices continued to climb during the week with Brent crude crossing $35 per barrel mid-week. With oil prices climbing almost 30% in the span of 10 days, the oil and gas sector reacted positively, albeit a bit conservatively, and rose 2.5% during the week, with the Oil and Gas Development Company and Pakistan Oilfields Limited leading the gains.

After weeks of speculation, the State Bank’s decision to keep the discount rate unchanged provided a huge boost to the banking sector. The sector received further attention after the CPI figures for January 2016 came above expectations at 3.3%, reducing chances of a rate cut in the future. Gains were witnessed across the board for the entire sector. Foreigners continued to offload equity at the bourse, although the magnitude of selling is on a downtrend. Foreign net selling stood at $2.2 million for the week, as opposed to $7 million in the prior week.

Average daily volumes shot up by 30.4% and stood at a healthy 144.3 million shares traded per day. Similarly, average daily values also jumped 33.3% and stood at Rs8.54 billion per day. The Pakistan Stock Exchange’s market capitalisation stood at Rs6.86 trillion ($65.6 billion) at the end of the week.



Winners of the week

Associated Services Limited



Earlier called Latif Jute Mills Limited, the company is one of the industrial machinery and services firms in Karachi.

Jahangir Siddiqui & Co



Jahangir Siddiqui & Company Limited is an investment company, offering share brokerage, money market, advisory and consultancy, underwriting and portfolio management services.

JDW Sugar



JDW Sugar Mills Ltd produces and sells crystalline sugar. The company is located in the district of Rahim Yar Khan and was formerly named United Sugar Mills Limited.



Losers of the week

Pakistan Tobacco Company



Pakistan Tobacco Company Limited manufactures and sells cigarettes.

Murree Brewery



Murree Brewery Company Limited specialises in the manufacture of beer and Pakistan-made foreign liquor. The group also has a juice extraction and food manufacturing divisions, located at Rawalpindi and Hattar respectively. Their glass division manufactures all the group’s bottles and jars.

Punjab Oil



Punjab Oil Mills Ltd manufactures and sells vegetable ghee, cooking oil, and laundry soap.

Published in The Express Tribune, February 7^th, 2016.

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