Bourse rallies on mini-budget approval

Gains 478 points as nod to SBP bill, rupee rise aid uptrend

ISLAMABAD:

Bulls kept their firm grip on the stock market in the outgoing week as the KSE-100 index registered a decent rally on the back of a host of positive developments including recovery of the rupee and approval of mini-budget and State Bank of Pakistan autonomy bill by the cabinet.

Much-needed clarity about the Supplementary Finance Bill and renewed expectations about the revival of International Monetary Fund (IMF) loan programme tossed the benchmark KSE-100 index above the 44,500-point barrier following a cumulative gain of 478 points, or 1.1%, at the end of the week on December 31, 2021.

“The week neared its end with investor sentiment strengthening after the Supplementary Finance Bill and mini-budget received the cabinet’s approval, as they were the last hurdles in the way of $1 billion tranche disbursement by the IMF,” stated a report of Arif Habib Limited.

The first day of the week saw the benchmark index drop as investors resorted to offloading their holdings over mini-budget uncertainty and dismal economic numbers.

The market staged a rebound and gained ground for the remaining part of the week, driven by encouraging developments that revived investor spirits.

Market players turned somewhat optimistic after the federal cabinet gave the green light to the State Bank of Pakistan autonomy bill to pave the way for release of next IMF loan tranche.

The approval of mini-budget by the government further strengthened hopes for the resumption of IMF programme because Pakistan met all conditions of the global lender.

These two factors fuelled the rally, prompting investors to make fresh buying.

Despite imposition of taxes worth around Rs350 billion, investor interest remained robust on expectations of a smooth recovery of economic indicators and the Pakistani currency.

The rupee broke a prolonged losing streak and made a surprise recovery in the last two sessions to touch a four-week high. The rebound proved positive for the stock market and propelled it higher.

News reports about the progress on approval of the draft of refinery policy also aided the uptrend.

“We expect the bourse to remain in the green zone amid clarity on the IMF front,” stated Arif Habib Limited report. “Moreover, we expect foreign inflows in the new month amid the ‘January effect’.”

During the week under review, average daily traded volumes rose 1.2% week-on-week to 218 million shares while average daily traded value climbed 13% week-on-week to $84 million.

In terms of sectors, positive contribution came from cement (112 points), fertiliser (75 points), commercial banks (72 points), tobacco (32 points) and oil and gas marketing companies (32 points).

Sectors that contributed negatively were power generation (18 points) and investment banks (7 points).

Stock-wise positive contributors were MCB Bank (45 points), Pakistan Oilfields (34 points), Engro (33 points), DG Khan Cement (33 points) and Pakistan Tobacco (32 points).

Meanwhile, stock-wise negative contribution came from Hubco (39 points), HabibMetro Bank (18 points) and Abbott Laboratories (17 points).

Foreign buying emerged during the week under review, which came in at $8.1 million compared to net selling of $3.7 million last week.

Major buying was witnessed in technology firms ($4.8 million) and other sectors ($2.5 million).

On the domestic front, selling was reported by banks/ development finance institutions ($2.5 million), followed by individuals ($2 million).

Published in The Express Tribune, January 2^nd, 2022.

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