Weekly review: Stock market gains 2% as political clarity emerges

Published: June 3, 2018

KARACHI: Stocks ended positive for the second successive week with a gain of 838.72 points (2%) as four out of five sessions remained positive. The index settled at 42,913 at the end of the week on June 1.

The modest recovery came on the back of improved investors’ confidence following finalisation of the caretaker government set-up. Assurances from government officials of holding general elections on time also paved the way for the benchmark KSE-100 Index to extend its gains. By midweek, repercussions of the turmoil in global markets due to political crisis in Italy, where the president had called snap elections, was also felt at the Pakistan Stock Exchange where the index once again plunged to finish trading in the red.

However, things took a turn on Thursday in the wake of buying interest that helped the index gain 300 points. Although activity remained dull, due to seasonal slowdown, the KSE-100 Index notched up marginal gains on Friday.

Despite investor optimistism, concerns over the macroeconomic front continued to dampen sentiments.

“The recovery could not salvage the returns for May, which came in at a dismal 5.8% on persistent foreign selling and concerns over balance of payments,” according to an Elixir Securities’ report.

Participation of investors picked up during the week with average daily traded value increasing 13% to $48 million while average daily volumes stood at 119 million shares, down 0.4%.

In terms of sectors, the biggest contribution to the index came from index-heavy banks. The sector gained 2.1% during the week, adding 163 points to the KSE-100 Index.

Domestic investors accumulated banking stocks after last weekend’s interest rate hike of 50 basis points – the real thrust was observed in mid-tier banking stocks while large caps continued to experience foreign selling.

Weekly review: KSE-100 undergoes turbulent ride

Among other major sectors, refineries gained 23.9% week-on-week, followed by pharmaceuticals (8.1%) and textile composite (6.8%). Oil and gas marketing, fertiliser and power sectors also closed in the green. Gains in the refinery sector were led by a plunge in international crude oil prices during the week.

Attock Refinery (up 24%) and National Refinery (up 17%) stood out as the two best-performing stocks in the KSE-100 Index amid attractive valuations and restoration of furnace oil supplies to power plants in Pakistan.

Searle Pakistan gained around 12% during the week as news was floating in the market about the build-up of position by a Milan-based asset manager in the company. Foreigners were net sellers during the week amounting to $17.5 million vs net selling of $26.1 million in the previous week.

On the other hand, amongst local investors, banks were net sellers of $4.7 million, whereas insurance companies were net buyers of $30.4 million. Mutual funds remained net sellers as they offloaded shares worth $3.6 million.

Among major highlights of the week were government announcing extension in the export package for another three years, central bank’s foreign exchange reserves once again posting a decline reaching $10 billion, cement prices increasing in retail market, Pak Suzuki Motor Company raising its car prices by around Rs30,000 and the State Bank launching Deposit Protection Corporation to protect small depositors.

Winners of the week

Attock Refinery

Attock Refinery Limited, a subsidiary of the Attock Oil Company, specialises in the refining of crude oil.

National Refinery

National Refinery Ltd manufactures and distributes lube base oils and petroleum fuels. The company markets its products to customers throughout Pakistan.

Losers of the week

Pakistan International Bulk Terminal

PIBT has been set up as the country’s first terminal for handling coal, clinker and cement on build, operate and transfer (BOT) basis at Port Qasim Authority.

Pakistan International Container Terminal

Pakistan International Container Terminal operates a container shipping facility in Karachi, Pakistan. 

Published in The Express Tribune, June 3rd, 2018.

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