On back of rupee devaluation, KSE-100 ends 1.2% higher

Political stability, rising international oil prices, domestic cement prices keep investor interest alive

KARACHI: Rupee devaluation against the US dollar and a pending monetary policy announcement, which was announced after market close on Friday, continued to keep the market bullish, as the KSE-100 index finished with a gain of 530 points or 1.2% to settle at 45,560 - the third successive week in green.

Despite the alarmingly low foreign exchange reserves, stocks prices continued to rise as relative stability at the political front, interest by foreign investors, rising international crude oil and domestic cement prices uplifted investors’ sentiments.

Stocks opened on a negative note on Monday, however, late buying helped the market recover and finish on a positive note. The market once again dipped on Tuesday, ending the five-day win streak as investors resorted to book profits. The situation improved by mid-week, as renewed buying interest amidst improving cement despatches and rise in prices propelled the index forward.

Furthermore, downwards sticky international crude oil prices tagged with the recent currency devaluation kept the investors’ morale high in E&Ps. Moreover, the government of Pakistan assured that it will facilitate Shanghai Electric to acquire KEL, which ultimately generated volumes, stated an AHL report.

Resultantly, the index finished the remaining two sessions in the green zone testing its earlier high levels. Activity also picked up as average volume traded increased 24% week-on-week to 240 million shares per day and average value traded was up 13% week-on-week to $86 million per day.

“During Mar 2018, the index gained 5.4% after posting a loss of 2% during the last month, where banking sector alone contributed 845 points, led by buying from local insurance companies,” stated Topline Securities.

In terms of sector, positive contribution came from fertilisers (138 points), cements (107 points), banks (104 points) as market participants were expecting an increase in interest rates, oil and gas exploration companies (58 points) given the recent rupee depreciation and power generation and distribution (42 points). The fertiliser sector was driven due to speculations during the week of a possible GIDC removal on feed gas, which could raise margins for fertiliser producers, particularly FFC. During the latter part of the week, there was also talk of terminating the Rs100/bag subsidy on urea in the next budget, which would lead to increase in urea bag prices.

On the flip side, sectors that remained under pressure were technology and communication (28 points), tobacco (16 points) and miscellaneous (6 points).

Scrip-wise, UBL (109 points), FFC (85 points), LUCK (76 points), KEL (41 points) and PSO (33 points) led the index forward. Stocks that contributed negatively to the index include HBL (39 points), MCB (34 points) and PAKT (26 points).

Foreign buying this week clocked-in at $1.9 million compared to a net buy of $0.2 million last week.

Buying was witnessed in exploration and production ($2.6 million) and all other sectors ($1.4 million). On the domestic front, major selling was reported by mutual funds ($10.5 million) and companies ($3.7 million). Whereas, buying was largely executed by individuals ($8.5 million) and insurance companies ($5.2 million).

Apart from this key highlights of the week were; potential increase in prices of petroleum by Rs3-4/ litre, SBP kept the key interest rate unchanged at 6%, Honda Atlas increased prices by up to Rs100,000 and GHNL announced re-launch of Datsun cars.

Winners of the week

K-Electric



K-Electric is a vertically integrated power utility, and a Pakistani electric supply company, based in Karachi, Sindh, Pakistan

Adamjee Insurance



Adamjee Insurance Company Ltd. underwrites insurance. The company offers fire, marine, automobile, engineering, and miscellaneous coverages. The engineering coverage includes contractor’s all risk, plant and machinery, electronic equipment and machinery insurance, and excise and customs, maintenance, and performance bonds. Miscellaneous includes health, accident, and liability.

Losers of the week

TRG Pakistan



TRG Pakistan operates as an information technology company. The company provides business support and software services to companies. TRG Pakistan manages call centres and offices located in Pakistan and elsewhere throughout the world.

Pak Tobacco



Pakistan Tobacco Company Limited manufactures and sells cigarettes.

Published in The Express Tribune, April 1^st, 2018.

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