Weekly review: KSE-100 surges for fifth straight week

Index gains 1,362 points as policy rate decision, investment in T-bills encourage investors

​ Our Correspondent December 01, 2019

KARACHI: The Pakistan Stock Exchange had a phenomenal rally in the outgoing week despite political uncertainty that jolted investors briefly.

The benchmark KSE-100 index managed to sustain its winning streak for the fifth successive week as it advanced 1,362 points or 3.59% and crossed the 39,000 mark after eight months. It closed the week at 39,288 points.

“In November 2019, the KSE-100 index increased 5,084 points or 14.9% month-on-month - this is the highest monthly return after May 2013,” said AHL Research in its report.

Earlier, trading kicked off on a bullish note as the central bank’s decision to leave the interest rate unchanged was welcomed by the investors, with institutional interest seen in cash-rich stocks.

Unfortunately, the trend changed in the following session after the Supreme Court took notice of extension in the chief of army staff’s tenure. The development caused panic among investors who offloaded stocks in droves, thus pushing the index once again below the 38,000-point level.

The bearish activity proved short-lived and the index returned to the green zone on Wednesday amid range-bound trading. The recovery came as investors considered the extension in army chief’s tenure as a procedural issue.

This, coupled with the continued surge in foreign investment in treasury bills, which crossed the $1-billion mark leading to a jump in foreign exchange reserves, acted as a catalyst for improving the overall sentiment at the bourse.

The uptrend continued in the following two sessions as emerging clarity on the political front prompted buying interest among investors. On Friday, extensive buying was seen after the Supreme Court’s verdict in the army chief tenure extension case. Activity remained strong during the week as average daily volumes went up 5% to 348 million shares and average daily traded value increased 8% to $80 million.

Contribution to the upside was led by commercial banks (up 522 points) due to attractive valuations, cement companies (120 points) amid robust sales numbers, fertiliser firms (116 points), automobile assemblers (80 points) and chemical producers (75 points).

Stock-wise, major gainers were Hubco (up 132 points), Fauji Fertiliser Company (94 points), PSO (40 points), Lucky Cement (32 points) and National Foods (29 points). On the other hand, HBL (down 63 points), Bank AL Habib (26 points) and Pakistan International Bulk Terminal (15 points) emerged as major laggards.

Foreigners offloaded stocks worth $8.06 million in the outgoing week compared to net buying of $8.46 million last week. Major selling was witnessed in cement firms ($3.36 million) and exploration and production companies ($1.95 million). On the domestic front, buying was reported by mutual funds ($11.06 million), followed by individuals ($7.30 million).

Major news of the week included the State Bank leaving the discount rate unchanged at 13.25%, large-scale manufacturing (LSM) growth contracting 5.9% in July-September FY20, foreign inflows in T-bills crossing $1 billion, SBP’s foreign currency reserves jumping $240 million to $8.68 billion and increase in power tariff to meet the IMF target.

Published in The Express Tribune, December 1st, 2019.

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