Index soars over 43,000 in stellar performance

Improved economic indicators, clarity on political front lifts sentiments

KARACHI:

The stock market’s impressive performance continued without interruption as the benchmark KSE-100 index racked up another 1,270 points (3%) in the run-up, crossing a 30-month high during the week ended December 18.

The index finished in the green for the fourth successive week as it crossed the 43,000 barrier on Monday for the first time since January and ended the week at 43,740.56 points on Friday.

The KSE-100 index closed in three of the five trading sessions in the positive territory with trading volumes picking up pace considerably. Despite this, some listlessness was seen from investors which restricted the bourse from powering past the 44,000-mark.

The week started off on an enthusiastic note after upbeat economic data removed some of the dark clouds hovering over the economy of Pakistan. Data revealed by the State Bank of Pakistan (SBP) showed that the country had once again received over $2 billion worth of workers’ remittances for the sixth consecutive month in November.

Coupled with the easing inflation, the developments acted as a catalyst for investors who took to buying stocks in droves, thus pushing the benchmark index above 43,000. Clarity on the political front also lent support as the Pakistan Democratic Movement (PDM) rally in Lahore held on December 13 concluded with an unimpressive turnout of supporters.

However, despite encouraging data of large scale manufacturing, which depicted growth of 5.46% for July-October 2020, stocks received a battering on Tuesday, as the KSE-100 index slipped in to red. Taking cue from the preceding session, sentiments remained sombre on Wednesday but despite the muted activity the index managed to notch up marginal gains.

The uptrend continued in the following session as the index surged on back of steep rally in global oil prices - which soared to a ninemonth high. Buoyed by improvement in macroeconomic indicators and increase in global crude prices, the index jumped to a 30-month high, sparking buying interest in exploration and production and oil marketing companies.

Even the dismal foreign direct investment (FDI) data, which depicted an outflow of $16 million in November 2020, failed to impact the market activity negatively. However, the tables turned on the last trading day of the week as investors booked profits in line with global market trends. The reversal was attributed to uncertainty in international oil markets, in the wake of demand issues, and the ongoing tensions between India and Pakistan.

The news of India planning to launch a “surgical strike” against Pakistan, revealed by Foreign Minister Shah Mehmood Qureshi during a press conference in Abu Dhabi held on Friday, adversely impacted the investment climate giving bears a chance to claw back some ground. During the week, the average traded volume inched up 22% to stand at 549 million shares, while the average value increased 25% to $154 million.

In terms of sectors, positive contributions came from banks (342 points), fertilisers (231 points) and oil and gas exploration companies (202 points). Scrip-wise, positive contributions were led by Oil and Gas Development Company (112 points), Fauji Fertilizer (95 points), MEBL (68 points), Engro Corporation (64 points) and Pakistan State Oil (63 points).

On the flipside, major sectoral loss was observed in power generation and distribution (37 points) while scrip wise negative contributions were led by Hubco (43 points) and Kohat Cement (15 points). Foreign selling continued this week clocking-in at $9.4 million compared to a net sell of $9.6 million last week. Selling was witnessed in commercial banks ($11 million) and fertiliser ($1.4 million). On the domestic front, major buying was reported by banks/DFIs ($7.1 million) and individuals ($5.1 million).